First Home Buyer’s Guide
Becoming a homeowner for the first time is a monumental step in anyone’s life. It’s a journey filled with excitement, anticipation, and perhaps a touch of anxiety. After all, purchasing your first home involves significant financial decisions and a lot of choices to make. But fear not! With the right knowledge and guidance, the path to homeownership can be a rewarding and fulfilling experience. In this comprehensive guide, we’ll walk you through the essential steps and considerations for first-time homebuyers, empowering you to make informed decisions and find the perfect home for you.
How do I get started buying my first home?
So, you’ve decided to buy your first property in Australia, congratulations! There are many things to consider in the home buying journey. Follow our 5 easy steps to kickstart your home buying journey.
1. Assess your Financial Situation
Before diving into the housing market, take a close look at your financial situation. Calculate your income, expenses, and savings to determine how much you can comfortably afford to spend on a home. Remember to consider additional costs like property taxes, insurance, and maintenance. Once you have a clear picture of your finances, it’s time to set a realistic budget for your home purchase.
2. Save for a deposit
One of the most critical steps in buying a home is saving for a deposit. Most lenders require a minimum percentage of the home’s purchase price as a deposit. The more you can save, the better, as a larger deposit will help lower your monthly mortgage payments. Below are some tips to help you save for your deposit:
Budgeting is key
Begin with creating a detailed budget to understand your income and expenses. This will help you identify areas where you can cut back and allocate more funds towards saving for your home loan deposit.
Set Clear Savings Goals
Determine how much you need for your home loan deposit and set achievable savings goals. Break down your target amount into smaller milestones to make your goal more manageable and trackable.
Consolidate or Pay Off Debts
Prioritise paying off high-interest debts or consider consolidating multiple debts into a single, lower-interest loan. Redirect the money you save from reduced interest payments towards your home loan savings.
Reduce Expenses
Look at reducing your expenses as much as possible by renegotiating bills, cancelling subscriptions or looking for cheaper alternative options.
3. Get Pre-approval for a Home Loan
Make your journey to finding and securing your dream home quicker and easier by having your loan pre-approved before you start house hunting.
Getting pre-approval means you can search for a home with the confidence of knowing you can borrow up to a certain amount, and you will have the advantage of being able to act quickly on an purchase should you need to.
Having pre-approval from your lender also gives you comfort and assurance if you intend to buy at auction, where you are committed to the sale and will be required to pay a 10% deposit on the day if you’re successful.
4. Start House Hunting
Once you’re pre-approved for a home loan, it’s time to start searching for your first home. Make a list of your must-haves and nice-to-haves, such as location, size, amenities, and school districts.. Be patient and be prepared to view multiple properties before finding the perfect one.
5. Making an Offer and Negotiating
When you find a home that meets your criteria, work with the real estate agent to make an offer. Your offer should consider the home’s condition, comparable sales in the area, and any contingencies you want to include (such as a home inspection or appraisal
How much can I borrow for my first home loan?
The maximum amount you can borrow for a home loan depends on various factors, such as your income, liabilities, credit history, and the loan to value ration (LVR). But remember, no matter how much you are able to borrow, it’s important to not over-commit yourself financially. You need to consider your present and likely future income, and how stable it will be over time. You also need to think about how you would deal with variable interest rates and repayments. To make first home ownership enjoyable, you toned to make it affordable.
What are all the costs of buying my first home?
It’s important to know all the costs of buying your first home, this is in addition to the actual pirce you pay for the house and the loan repayments. These costs will vary depending on the price of your property and the size of your home loan. An estimated figure to keep in mind is around 5% of the property value.
These additional costs include:
- Legal fees
- Loan establishment charges
- Pest inspections
- Building inspections
- Moving expenses
- Stamp duty (or ‘transfer” duty)
Most Australian States have Stamp Duty exemptions for first home buyers, which is good news because it usually the biggest purchasing cost. Find out if you’re exempt from paying Stamp Duty on your first home, or how much you might need to pay, with our handy calculator.
Explore Government Assistance Programs
The Australian Government’s Home Guarantee Scheme (HGS) supports eligible home buyers to buy a home sooner. The scheme includes three types of guarantees:
- First Home Guarantee (FHBG) – supporting eligible home buyers to buy a home sooner, with a deposit as little as 5%.
- Regional First Home Buyer Guarantee (RFHBG) – supporting eligible regional home buyers to buy a home sooner, in a regional area, with a deposit as little as 5%.
- Family Home Guarantee (FHG) – supporting eligible single parents and eligible single legal guardians of at least one dependent to buy a home sooner, with a deposit as little as 2%
