Renting a house is a big step for a student, so you'll need to be well-informed about what you're getting into. Read this guide to find out the most important things you should consider before renting or buying a house.
If you are a student that is getting ready to move away from home and you are thinking about renting a house, then here are a few things that you should take into consideration before making a move. This student's guide will help you sort out what is important to look for when you are ready to strike out on your own.
Renting a house
Here are a few questions you should ask yourself when you are looking at renting a house.
- If you own a car, does the house have parking? If you need to take a bus are you close to public transport?
- If the house is not in good shape, is the landlord willing to put it in writing that the house will be fixed before you move in?
- Are you interested in renting a house close to shops, a park or near your work?
- Do you like being around other people, or would you rather have your own space after a hard day at school or work?
Sharing a house
If you have made the decision that sharing a house would be right for you, then one thing you should do early on is sort out the financial issues with your housemates. Figure out how the bills are going to be divided so that there will be no misunderstandings later on.
The phone bill can often present a problem if it has not worked out beforehand. You could consider having the phone only for incoming calls, use itemised phone bills or prepaid phone cards.
Another thing that should be sorted out early are the chores. You will need to work these out as a group when you are renting a house. Make a list of chores and get everyone to do a fair amount of work. When you agree to a chore, make sure that you can do it, and then if you do more your housemates will be quite happy.
It can be quite affordable sharing a home with others, and a lot of fun.
Your obligations and rights
A tenancy agreement is a legally binding document, so make sure that you fully understand all of the terms before signing it. As a tenant, you will have the right to privacy, to having the property maintained properly and any faults repaired promptly.
Your obligations will be to pay for any damages, look after your place and pay your rent on time.
Rental bond
In most cases the landlord will ask you for a rental bond for security purposes. It will usually be about four weeks worth of rent. You will get this back once you leaves the property as long as your rent is up to date, you have properly cared for the property and there was no damage done.
Make sure that you pay the rent on time because if you are 14 days late your landlord has the right to ask you to leave by giving you a 14-day notice.
Buying a house
If you want to buy a property then you are probably going to have to cut back on other expenses like cars and holidays for a while. You will need to put together a fair sized deposit so that you will have less to borrow. You may want to ask your family to help out so that you can get your home faster.
Saving up enough for the deposit
It may seem like a daunting task at first, but many other people have managed to scrape together enough money for a deposit on a home. You should look at getting together between 3% and 10% of the price of the home for a deposit. Another thing to keep in mind is if you put down a deposit that is less than 20%, you will also have to get mortgage insurance.
First Home Owner Grant
Some first-time home buyers are eligible for a $7000 grant from the government for homes that are worth under $500,000. If you are a first-time buyer you should definitely see if you qualify for it.
How much are you able to Borrow?
This will be based on how much investment income you have, what you're earning, how big your deposit is and other financial commitments you may have such as personal loans and credit cards.
Home ownership in 10 easy steps
- Find out what the housing market is by checking listings and going to auctions and property viewings.
- Figure out what you can safely afford.
- Get pre-approved for a loan so that you will be taken seriously by all parties.
- Submit an offer and negotiate on the price. Use all of your bargaining powers to get a good deal when buying a house.
- Arrange for the property transfer over to you from the seller. This will all be taken care of by your solicitor.
- Get a property inspection and get it checked for insect problems.
- Exchange your contracts. Both you and the vendor will sign a contract and these will be exchanged by the solicitors.
- Pay for the deposit. If you bought the home at an auction it will be 10% of the purchase price that needs to be paid immediately. If purchased by private treaty, you can get the sellers to take the home off the market with a holding deposit. This is, however, not legally binding.
- Get insurance. Part of the process for getting a home loan involves getting some home buildings insurance. You may also want to add contents insurance to this since it may be cheaper to get both at once.
- Settle the deal. Pay the balance of the purchase price for the property and then take ownership.
Costs involved
Unfortunately, when you buy a home there are a lot of costs involved. These include costs for setting up the loan, stamp duty, which is a government tax, solicitor fees and inspection fees.
Whether you are renting a house or buying, stepping out on your own is a big adventure. Making sure that everything goes smoothly is your responsibility now, and you can ensure this by finding out everything you can about living on your own.
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