The managing director of a major brokerage has issued a checklist for brokers to tackle with first home buyers, as research highlights significant gaps in knowledge and “property buying literacy”.
Don Crellin, MD of Resolve Finance says there are seven things a broker should ensure their FHB customers know ahead of making their first purchase. His advice follows separate industry research which demonstrated that 61% of first home buyers do not have enough market knowledge to pass a property buying literacy test.
Research from ME Bank found that 70% of surveyed FHBs feel confident about making financial decisions and 50% are confident when it came to the property buying process and related costs. However, the good news ends there.
“It’s worrying that first home buyers feel confident signing on the dotted line with a low understanding of financial literacy behind them,” said Crellin. “They could be signing off on financial decisions that are inappropriate for their circumstances, ones which will really cost them in the long run,” he added.
The brokers’ checklist: Seven things to tell FHBs
- LMI is coverage for the lender, not the borrower.
- Buyers will potentially need to factor in stamp duty, conveyancing and legal fees, pest and building inspection fees, mortgage registration and transfer fee, loan application or establishment fee, LMI, council and water rates. This may need to be subtracted from their deposit.
- There is no “cooling off” period on an auction buy. Buyers also need to pay a sizeable deposit and so require access to tens of thousands on that day.
- It is wise to engage a conveyancer; a licensed and qualified professional who can provide advice and information about the sale of a property, prepare the documentation and conduct the settlement process.
- If buying a new home is a marathon, settlement is the finish line. It’s where legal possession of the property is taken Most people use a conveyancer or solicitor to assist them through settlement.
- The benefit of having an offset account is often underestimated
- Your own value! Especially in the current climate, ensure your customers understand that a mortgage broker helps customers identify the most appropriate lender and product; they negotiate the loan on a buyer’s behalf and do all the legwork regarding research.
Figures show first home buyer confusion
Buyers head to brokers in difficult market
Long wait for first home buyers