If you’re searching for home buying tips, you might also be asking yourself—what’s the best age to buy a house? There’s no right or wrong answer. As we get older, the process of buying a home evolves. We age, factors surrounding our lives change, and what we want or have in our 20s might not be the same as in our 30s or 40s.
As 2020 taught us, there’s no surefire way to predict the future. But the experts sure can help. Which is why we’ve consulted Pete Wargent from BuyersBuyers. An industry veteran, Pete’s tried and tested strategies have helped homebuyers onto the property ladder in faster and smarter ways.
So we’ve asked Pete to clue us in on what we should be looking out for at each major decade in our lives. From home loans to tips on scouting out appreciative locations, this guide will assist you in making informed decisions and potentially answer the question on the best age to buy a house.
Home Buying Tips For Your 20s
Your 20s are a good time to start thinking about whether buying a house is a financial investment you want to make. What do your finances look like? Where do you want to be for the next five years? What kind of location are you prioritising—city or coast?
Buying vs Renting
While we discussed this thoroughly in one of our earlier articles, there is no correct answer. But the upside of starting the home-buying journey in your 20s is that you have a long way to go. A longer runway before the retirement age means more time to pay off that loan. But for those with a deposit ready, Pete advises getting on that ladder as soon as you can.
On that note, we do want to highlight the costs beyond just saving for the deposit—like monthly repayments and household items. This can prove very challenging. So be certain you have enough to cover those as well as unexpected costs. It will require discipline and compromise.
Asking your parents for help
Despite the low mortgage repayments rates we’ve been experiencing, the biggest hurdle is still the deposit. The difficulty for first home buyers to afford the deposit has been exposed in bigger cities like Sydney and Melbourne.
Perhaps you’ve considered asking your parents for some financial assistance, and there’s no harm in that. Many parents want to offer their kids a head start and buying property is often a worthwhile, trustworthy investment.
So how do you go about asking your parents for help with the deposit? Pete outlines a few ways. Many parents might offer to match what you save. Others can help with the monthly repayments. Or another option is the family guarantee, This is where your parents act as a guarantor of the home. You can read more about asking your parents to be guarantors here.
So regardless of which option you and your family choose, it’s best for everyone concerned to be well informed and educated about each aspect of the decision. And this may involve reaching out to professionals in the industry, like buyer’s agents, who can use their knowledge on the property market to ultimately save you money on the property purchase.
Home Buying Tips For Your 30s
Most first home buying occurs in this decade. Pete chalks this up to “Australia’s hugely strong population pyramid in the 25-35 years old age bracket, and partly due to government incentives to bring first-timers into the market.” So the best age to buy a house may very well be in your 30s.
Pete elaborates with six tips to consider first before buying your first home:
1. Understand the basics of home buying
Buying a home is a big decision, both financially and emotionally, and one that most of us only make a handful of times in our lives. In that, the purchase works better long-term. If you buy and sell too often, transactional costs like stamp duty will weigh you down.
2 – Look for scarcity
At the time we spoke to Pete, there was a shift of people away from the CBD and into the regions in search of space. He notes that this could be a smart move for first home buyers. “Property prices are driven by supply and demand, so you should consider where there might be an oversupply of new dwellings being built.”
Finding something unique, perhaps with a view, or a unit in a boutique block, could offer home appreciation potential over time.
3 – Secure appropriate financing
Before you can buy a home, you will need mortgage pre-approval from your lender. Home loans services, like Soho’s, connect you with professionals so you can find out what you qualify for and determine the best home loan for you. They can also advise on any deposit schemes or stamp duty exemptions.
Pete warns that mortgage rates are at their lowest now but that doesn’t mean they’ll stay as such. To be safe, “run some numbers with a licensed professional to ensure you are not borrowing more than you can comfortably afford to repay, especially if interest rates move higher in the future.”
4 – Do your research
Before you buy a home, it’s necessary to do a little research. Start with your budget and price point, then take Pete’s top-down approach before narrowing down on the suburb, street and property type within your budget.
Take it a step further with BuyersBuyers’ report tool Where to Buy—a personalised analysis that finds you the best suburbs to buy in, based on your individual criteria.
5 – New is not always better
Many of us are reeled into buying fresh, newly constructed homes. And why not? They’re beautiful, modern and brand new. But Pete instructs to proceed with caution, as statistics show more people lose money when the property is new.
“Like buying a new car, you tend to pay a price premium to buy new, which effectively represents the developer’s profit. But when you come to sell, the property is no longer brand new, and therefore there may have been some depreciation in the price.” The same goes for buying off-plan, where there’s a lot of risks for problems you can’t see or predict.
The important thing is to understand the risks and do your due diligence. This means researching the property, the developers, and making sure you’re covered properly.
6. Do your due diligence
Speaking of due diligence, the entire home buying process should be researched and thought through. Pete recommends the following steps:
-research all comparable market sales to ensure that you do not overpay
-use an expert conveyancer or solicitor to confirm all relevant searches
-check for nearby development approvals
-conducting the relevant building and pest inspections
-understanding local market trends
-where relevant, conducting strata search or body corporate report
How professionals can help
Pete also encourages the use of a buyer’s agent for their in-depth market knowledge. Especially now in the time of the pandemic. From inspection rules to auctions, a lot is changing and we can quickly lose out if we don’t act in time. Buyer’s agents can assist us with these, and assess whether we’re paying the right price for the right property.
Home Buying Tips For Your 40s
In your 40s, assessing your lifestyle is what will come in handy before you buy a home. If you have children, will they be living at home for many years to come? Or are they teenagers ready to flee the nest? If it’s the latter, you might consider downsizing. Especially if you plan on travelling often.
To buy a new home or renovate?
Your 20s might be the best age to buy a home, but your 40s might be the best for revamping. Whether you want to upsize, downsize, or renovate, the right property decisions in your earlier years may have set you up just right.
The decisions you make on real estate can be emotional and they can be financial. For instance, your home right now—was it picked based on proximity to schools or jobs? What would happen if you moved? These are emotional factors that influence your property choices.
On the other hand, financial implications should be weighed as well. Getting a new home incurs costs—from selling to buying and the move itself, this can be a heavy burden.
So assess your budget before moving. “Staying out and renovating may be the most efficient way to go,” says Pete, “if this is practicable from a lifestyle perspective.”
Investing in property
Investing in property would be one of the financial decisions we talked about earlier. As the intention behind this would be to gain capital.
“Partly due to the tax system in Australia, owning a rental property has proven to be a popular way to build a nest egg for many Australians.” So Pete invites you to consider your financial situation, including all the real estate in your possession, your superannuation and other investments.
New properties are usually attractive to investors, but they may discover underwhelming capital gains down the road. These off-plan buildings lose their novelty premium unlike established properties which can be added to, or renovated, whilst still maintaining the initial value.
So your best bet is to speak to a property planner or mortgage broker and see what your options are.
Still on the hunt for your dream home? Soho can help you out. Browse our search page to check out some amazing listings available right now. But don’t just stop there, download our app to get the full Soho experience. Just remember to shortlist or swipe left on our listings so we can send you others that better match what you’re looking for.