Common Hurdles During The First Year Of Owning A New Home

Buying your first home is a massive step towards a secure financial future, and perhaps the start of adulthood for many young Australians. However it’s not all roses – with a purchase so massive there are bound to be difficulties and challenges moving forward, both before and after the purchase.

Many buyers may worry about saving for a deposit, or affording a property in their desired location, forgetting that there’s still a lot of work to do after you purchase your home.

While worries before buying will be known to most who aspire to home ownership, these challenges after buying may not be so obvious. With the purpose of making first home buyers lives just a little bit easier, let’s have a closer look at some common post purchase issues and how to solve them.

The numbers

A Westpac survey shows that roughly a third of first home buyers find their initial year in a new home the most difficult. A reason for this could be they didn’t know exactly what to expect. That’s why it’s essential you learn as much about the home buying process and the Australian property market as possible, seeking help from a professional estate agent or mortgage broker if you’re unsure.

The Westpac survey also noted that 36 per cent of respondents said that paying stamp duty on their new home was the most difficult challenge during their first year. A further 25 per cent said that adjusting their lifestyle to afford mortgage repayments was the most difficult. Let’s look closer at these two steps of the home buying process, to help make them easier for young buyers.

The stamp duty

Stamp duty is a rather large tax levied by the government upon the purchase of your home. It comes in the form of one lump sum payment, scales according to the cost of your property and varies depending on the location and purpose of your purchase.

If your buying your first home as an investment property, you may pay more. On the other hand if you’re buying a new property as your first home and you intend to live in it you may pay slightly less. Using state and territory government stamp duty calculators, we can provide you with some examples of what this cost might be.

Buying at CoreLogic’s averaged median unit price across our five biggest cities, $590,770, stamp duty in NSW and Victoria will cost you roughly $10,000 and $15,000 respectively. You’ll pay $12,000 IN QLD, $31,000 IN SA, $18,000 in ACT, $29,243 in the NT, $22,106 IN TAS and roughly the same in WA.

While this is a large cost, if you know that it’s coming and plan for it, it shouldn’t cause you any problems at all.

Making lifestyle adjustments

Repaying a mortgage is a serious commitment that may necessitate some lifestyle changes and cutting of unnecessary costs. Using the Commbank mortgage calculator, the aforementioned five city unit price of $590,770 and assuming a 20 per cent deposit, you’ll have to pay roughly $600 a week over a 30 year term home loan.

With this in mind, Money Smart data shows that on average Australians spend well over a $100 a week on non-essential costs such as holidays, shoes, animal expenses and audio visual equipment.

Cut some of these unnecessary costs out of your life and plan your budget more thoroughly and you’ll find that your mortgage is a breeze to repay. Additionally, as long as you expect to change your lifestyle and plan out  your sacrifices the changes wont be anywhere near as jarring as they might have been otherwise.

Reference: Ray White 2016