Buyer’s agent reveals how much money first home buyers should have saved when purchasing a property 

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An Australian buyer’s agent has revealed how much money first home buyers should have saved before they consider purchasing a property, with all the associated costs beyond the tagged price.

Amy Lunardi, 33, told FEMAIL it’s important for buyers to consider whether they are both ‘financially and emotionally stable’ to purchase a house. 

‘How much money an individual should have saved depends on their financial situation and how much they are willing to pay for a property, though this can be determined by speaking to a mortgage broker,’ she said.

Amy said when purchasing a home in Australia, the largest cost is the deposit followed by the stamp duty, but other smaller costs also follow – including purchase and ownership costs.

To share her helpful tips, Amy has created a podcast titled The Buyers Bible and shared videos on TikTok.

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Australian buyer's agent Amy Lunardi (pictured) has revealed how much money first home buyers should have saved when considering purchasing a property and the little-known costs involved

Australian buyer’s agent Amy Lunardi (pictured) has revealed how much money first home buyers should have saved when considering purchasing a property and the little-known costs involved

The Melbourne property agent told FEMAIL it's important for buyers to consider whether they are both 'financially and emotionally stable' to purchase a house

Amy said when purchasing a home in Australia, the largest cost is the deposit followed by the stamp duty

The Melbourne property agent told FEMAIL it’s important for buyers to consider whether they are both ‘financially and emotionally stable’ to purchase a house

Deposit – between 5 and 20 percent of property value 

Amy said the deposit is usually the ‘biggest initial cost’ and it’s ‘ideal’ to put down a ten to 20 per cent deposit on the home.

While buyer’s have option to pay a deposit of as little as five per cent, Amy recommends aiming for at least ten per cent to minimise risks and lower the overall expense.

’20 cent is ideal to avoid paying the lenders mortgage insurance (LMI) cost and lower interest payments,’ Amy said, which is also the percentage recommended by banks.

According to ANZ, this lenders mortgage insurance protects the lender in the event that the home owner defaults on the home loan and there is a ‘shortfall’ of money.

But in many cases, home owners can’t afford this 20 per cent deposit, and so Amy recommends aiming for at least 10 per cent.

Amy said the deposit is usually the 'biggest initial cost' and it's ideal to put down a ten to 20 per cent deposit on the home

Amy said the deposit is usually the ‘biggest initial cost’ and it’s ideal to put down a ten to 20 per cent deposit on the home

Stamp Duty – based on state and property value

The stamp duty fees on a home vary across states, but Amy said there are online stamp duty calculators which show how much money the buyer will need to pay depending upon location and property price.

‘Depending on which state you’re in, you can either pay no or a reduced amount of stamp duty as a first home buyer, which is generally based on the purchase price of the property,’ Amy said.

‘In most states, there’s first home buyer grants available where the government will give you some money to buy or build a new property.’

The amount of stamp duty paid is also determined by the property’s value.

The stamp duty fees on a home vary across each state in Australia, but Amy said the best and easiest way to determine this price is to use the online stamp duty calculator

The amount of stamp duty is also determined by the property's value

The stamp duty fees on a home vary across each state in Australia, but Amy said the best and easiest way to determine this price is to use the online stamp duty calculator. The amount of stamp duty paid is also determined by the property’s value.

IS NOW THE BEST TIME TO BUY? 

Amy said the recession due to the coronavirus crisis hasn’t impacted property prices as much as people believe 

She said in Melbourne, costs are still up seven per cent compared to 12 months ago

‘The Melbourne market is still up seven per cent compared to this time last year and the costs haven’t decreased very much,’ she said. 

‘But it’s not a bad time to buy if you have stable finances because there is less competition as less people are buying.’

She said a lot more properties are being sold ‘off the market’ and aren’t advertised on the internet, so buyers can often find a better deal by contacting agents directly 

She said to ensure you are confident and comfortable with your finances before considering purchasing a home and speaking to a mortgage broker 

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Purchase costs – between $2,000 to $5,000

Amy said purchase costs include building inspections, legal costs, registration fees, council rates and beyond.

‘These are definitely the least-known costs buyers often don’t know about,’ Amy said. 

After purchasing a new home, it’s important to have the building inspected to asses whether there are any defects or maintenance issues that need to be looked at, though these inspections often cost $500.  

‘After settlement, the buyer would often need to pay a portion of the council rates, water rates and other costs,’ Amy said.

She recommends having between anywhere between $2,000 to $5,000 saved for these purchase costs. 

Amy said purchase costs include building inspections, legal costs, registration fees, council rates and extra little costs

Amy said purchase costs include building inspections, legal costs, registration fees, council rates and extra little costs

Moving and product costs – varies based on buyer

The moving costs can add up and needed to be factored into the affordability of the home, along with any additional products and furniture needed.

Depending on the individual, this will vary as some may have family or friends willing to assist with moving, while others will face additional costs for interstate or regional moves.

First-home buyers needing to furniture from scratch should use budge options such as Kmart or IKEA or online second-hand sites.

Ownership costs – depends on home value

Those making the transition from renting will find themselves hit with a whole new range of costs that tenants don’t pay: building insurance, council rates, contents insurance, owner’s corporation fees and maintenance or renovation fees.

Amy said if any issues surface, such as a leaky roof or a burst pipe, the owner has to pay for the repairs, and so it’s important to have some extra money saved just in case this occurs.

‘If the hot water system blows as soon as you buy the property, that could instantly cost up to $1,500 to fix,’ she said as an example. 

The moving costs are straightforward and are the costs needed to move into the house, along with any products and furniture needed to fill the house

Unlike renting, owning a home involves paying ownership costs

The moving costs are straightforward and are the costs needed to move into the house, along with any products and furniture needed to fill the house. Unlike renting, owning a home involves paying ownership costs too

Buffer account – between three to six months worth of savings 

Besides the upfront costs and ongoing ownership fees, Amy also said it’s important to have a ‘buffer account’ just in case an emergency occurs and the buyer needs to pay a certain amount all of a sudden.

She recommends saving between three to six months worth of money to use on a ‘rainy day’.

‘This is so you have something to fall back on and aren’t relying on other people, such as friends or family, to help with the repayments,’ she said. 

Amy also said it's important to have a 'buffer account' just in case an emergency occurs and the buyer needs to pay a certain amount all of a sudden

'This is so you have something to fall back on and aren't relying on other people, such as friends or family, to pay the repayments,' she said

Amy also said it’s important to have a ‘buffer account’ just in case an emergency occurs and the buyer needs to pay a certain amount all of a sudden

When asked how real estate has been impacted by the recession due to the COVID-19 pandemic, Amy said the market has been ‘resilient’ and prices haven’t dropped as much as people think.

‘The Melbourne market is still up seven per cent compared to this time last year and the costs haven’t decreased very much,’ she said. 

‘But it’s not a bad time to buy if you have stable finances because there is less competition as less people are buying.’

When considering purchasing a property, Amy highly recommends speaking to a mortgage broker to discuss how much you can afford. 

TIPS FOR FIRST HOME BUYERS CONSIDERING PURCHASING A PROPERTY IN 2020

Amy said while prices haven’t dropped as much as people think in 2020, there are less competitors as less people are looking to buy 

Consider whether you are both financially and emotionally stable 

Only buy if it’s the right time for you and if you can afford it 

Don’t focus on the ‘noise’ around those who say now is the best time to buy, focus on what’s right for you and whether you can afford to buy a property 

Consider how much you earn, how much you spend and whether you can afford the costs 

Speak to a mortgage broker and consider if you are eligible for any grants

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