Buying your first apartment
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So you're ready to buy your first apartment. Now what?
Making the decision to purchase your first apartment is exhilarating and daunting. Investing in an apartment home can be surprisingly more complex than buying freehold property because the building and land are not your property - you only get to own the space within your own walls. There'll be nuances that you'll need to consider before and during the buying process.
Berry Everitt, CEO of the Chas Everitt International property group, talks about the apartment market, saying, "In the last year, we've seen a 5% increase in sectional title townhouse and apartment sales, while freehold sales are declining. During the pandemic, many young people opted to reside with their parents or families, while existing homeowners were forced to downsize. As a result, the sectional title market is a competitive space at the moment."
Six essential steps to buying your first apartment
Here are some small practical steps to bring you closer to taking the giant leap of buying your first apartment.
1. Set your budget
There are several useful online home finance calculators to help you determine the property selling price that you can comfortably afford. Typically, the rule of thumb is that your bond repayments should not exceed 30% of your gross income. However, parallel to this, it's important to look at your overall standard of living and financial commitments.
2. Identify desirable locations
You're unlikely to enjoy even the poshest apartment if it requires you to commute for hours each day. Take time to identify the areas you find attractive and consider how central they are to the places you need to visit frequently or wish to visit more.
3. Make a list of personal needs
You're investing a lot of money into your new apartment, so be sure that it's the "right fit" for your lifestyle - and obviously, within your budget. Because shopping around can be overwhelming, make a list of the things that really matter to you, such as fibre connection, a balcony for your pot plant hobby, a guestroom for regular visitors, or a bright office space if you work from home.
4. Investigate safety and security
Living in an apartment means sharing certain areas with other people, from all walks of life. Not only do you want to find out how noisy or disruptive your potential neighbours might be, but you'll want to know who else might have access to your apartment building. So, be sure to investigate what security measures are in place, such as guarded access control points, biometric identification and CCTV surveillance, and decide if you'll have peace of mind under those conditions.
5. Seek advice from a reputable real estate agency
As a first-time buyer, you'll be confronted by a whole range of new challenges, ideas and considerations when shopping for your first apartment. Get an expert on your side - someone to point out your blind spots, answer your questions, help you negotiate, and steer you away from potential pitfalls. Having an agent is free to the buyer, so the ROI is (literally) immeasurable.
6. Make sure you understand the costs of ownership
Finding the right apartment at the right price isn't all you have to consider. Remember to explore the costs associated with owning the apartment. Before you sign an offer to purchase, ask about levies, insurance requirements, property rates, and utilities - because ownership costs stack up pretty quickly!
Quick Tips for Home Financing
First-time buyers, here are some nifty tips to start preparing to finance your new apartment.
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Start saving for a deposit. Most major lenders suggest that first-time buyers put down a deposit of around 10% of the purchase price.
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Conduct a mortgage pre-qualification with a reputable mortgage broker. This will give sellers increased confidence in your offer to purchase.
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Start gathering supporting documentation to accompany your home loan application. These may include your ID, 3-6 months' bank statements and payslips, and documentation to support any additional income.
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If your budget is a bit tight to qualify for the bond you need, you could ask a stable family member if they are willing to assist you to pay a bigger deposit and thus lower your monthly bond repayments. But it might be better to rethink things and buy a less expensive first home and create some financial leeway to deal with any future interest rate increases.
Buying your first apartment should be a thrilling adventure and a step toward independence. By making sure you're well-informed and fully prepared, you can make the journey as much of an adventure as you'd like it to be. Contact a Chas Everitt agent if you'd like a seasoned expert to walk the road with you.
Author: Chas Everitt