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Oct 11, 2014

Can you really afford NOT to buy your first home?

An interesting and unexpected thing happens when you buy your first home: you suddenly seem to have money!
This is because virtually all the costs of the purchase are rolled into your loan and you typically don't make your first mortgage repayment until a month AFTER settlement.
Contrast that with moving into a rental property where you pay everything up front. There's a bond which is frequently about 4 weeks' rent, plus the rent itself, which is either paid monthly, fortnightly or weekly in advance.
So to rent you need at least FIVE WEEKS' RENT UP-FRONT. And often 8!
But when you buy, you borrow from the bank enough to buy the house, plus the termite & building reports, plus the settlement and other costs. 
The First Home Owner's Grant gets you $3,000 from the government plus Transfer Duty exemption of up to about $14,000 (as long as the house price is less than $430,000).
Also, if you buy your first home for $400,000 or less through a real estate agent, you can get your settlement and incidental costs of up to $2,000 reimbursed from the Home Buyers Assistance Account. In Kalgoorlie this on its own, often covers your first mortgage payment.
But wait, there's more! When you move out of your rental property, you should get your bond back (of around 4 weeks' rent) AND, since your rent is paid in advance, you stop paying rent a week, fortnight or month (as the case may be) before you move out. Who needs free cheap steak knives when you can afford to buy really good ones!
Can you really afford NOT to buy your first home? What are you waiting for?
So what to do next? Talk to a mortgage broker or bank lending officer about what you need to do to get your finances in order to qualify for a loan. Do it now.
DISCLAIMER: The above advice is intended to provide a summary and is not intended to be relied on in any particular case. It should NOT be construed as legal advice. For detailed advice specific to your circumstances you should seek specific advice from an appropriately qualified professional.

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