John and Angela's home buying story

"In the end we got the kind of home we were looking for, but in a different area than we planned."

John and Angela (not their real names) recently bought their first home.  They began the process while living and working in Australia, checking out real estate websites to get a feel for what was available.

Neither John nor Angela had much knowledge of the home buying process before they started.  “There’s a lot to know and a lot of jargon involved, which we had to get to grips with,” says John. “Our Mobile Mortgage Manager was a very useful resource in terms of explaining what things were and how the process worked – it took quite a while so we definitely learnt a lot along the way!”

Finding a home
John and Angela were surprised by how long it took them to find the right home.  They spent 14 months looking at places.  They estimate they would have looked at 2 or 3 homes every weekend during that time.

John says they didn’t expect it to take so long – although they had some pretty firm ideas about what they were looking for and didn’t want to give up on that.  “We also expected that we’d get more for our budget,” he says.  “In the end we got the kind of home we were looking for, but in a different area than we planned.  We had to review our expectations in terms of location because the areas we started looking in were just too expensive.  But we’re very happy with the home we bought.  We just didn’t think it would take so long to find it.”

They worked with a variety of real estate agents as well as looking on property websites and in newspapers and real estate publications.  “Some agents were great, but some weren’t.  They showed us homes that clearly weren’t what we were looking for, and with some we weren’t sure we were always getting the right information.  However, the agent who sold us our home was very proactive and we really felt we could trust her.”

Making an offer
John and Angela found making an offer one of the most frustrating parts of the home buying process.  They made offers on six homes before they bought one, mostly in closed tender situations.  “It was difficult, because you didn’t know what to offer, and you also didn’t know what other people were offering.” 

In deciding how much to bid, John and Angela relied a lot on advice from the real estate agents.  They didn’t commission any builder’s reports prior to bidding because as an architect, John had a pretty good understanding of the condition of a property.  They also didn’t get any valuer’s reports, which in hindsight may have helped establish the bid.

The home they bought was for sale by auction, but offers were accepted prior to the auction date.  John and Angela were keen on the home so put in an early offer.  Other parties who had registered their interest were then given a deadline to submit offers, and John and Angela’s was eventually accepted – so the home didn’t go to auction.  There was some negotiation before a price was eventually agreed – John and Angela had to raise their offer twice before it was accepted.  Their real estate agent negotiated with the seller, and gave them an indication about what the seller was prepared to accept.

Because they liked the home they put in their best offer, which was slightly above what they really wanted to pay.  They trusted the advice of their real estate agent in terms of what to offer, and they’re happy with the result.

Finance
John and Angela started by compiling a budget.  They used the software program Microsoft Money to help them create their budget and stick to it.  “We were quite disciplined about our spending,” says John.  “We wanted to save for a deposit so we knew we had to have a budget.”  They managed to save around $70,000 for a deposit and had a good idea of how much they could afford, which they confirmed when they got a pre-approved home loan from the Bank.

They chose The National Bank for home finance based on recommendations from friends.  They arranged their home loan with a Mobile Mortgage Manager, who worked with the couple to structure a home loan that gave them a mixture of flexibility and certainty.  Here’s how they financed their home:

• Purchase price: $328,000
• Their deposit: $72,000
• Home loan required: $256,000 structured as follows:
  o $16,000 in a flexible home loan
  o $240,000 on a fixed interest rate home loan

The fixed portion gave them the certainty of knowing what the repayments on that portion would be.  The flexible portion was an important part of the mix because:

• They wanted the ability to repay part of the loan as fast as possible
• They also knew they wanted to do some renovations to the kitchen and bathroom in the near future and wanted the ability to re-borrow money if they needed it.

”It took quite a while to get our head around how the Flexible Home Loan worked,” says John.  “We had two or three meetings with our Mobile Mortgage Manager to try and understand it, and more importantly how it could benefit us.  But having had one for a while, I’d have to say it’s worked for us.  We’ve already repaid $10,000 and got it down from $16,000 to $6,000.  We’re pretty disciplined and I think you have to be to make it work – but having said that, we don’t really feel that we go without anything that we really want.  We were also attracted by the ability to borrow for our renovations, which we’re just about to start.”

Settlement and moving
There was a two month period between the offer being accepted and settlement, which was a little frustrating as, having had their offer accepted, John and Angela were keen to move in.  However, on the day, both settlement and moving were relatively straightforward and hassle free.  There were no delays in settling and they organised the move themselves which only took half a day with the help of friends.

A final word
Although the process took them much longer than they’d anticipated, John and Angela wouldn’t do things much differently.  Their advice is to be patient and hold out for the things that are really important to you in a home – after all there’s always another one.  While they ended up purchasing in a different area, they found a home with the features they wanted and are very happy living there.  In fact, they did put an offer on a house in the same area, but pulled out after getting a builder’s report which showed it to be in poor structural condition.

While there was a lot to learn, they picked up a lot along the way from the professionals they worked with such as their Mobile Mortgage Manager, as well as advice from friends and family who had purchased homes.  Their advice is to tap into that network of information.

Next step | Making an offer >>