Buying your first home is a massive milestone, but let’s be honest… it can also be one of the most stressful things you’ll ever do. Between sorting out your finances, dealing with banks, and figuring out exactly what you can afford, it’s easy to feel overwhelmed. But don’t worry! This guide will break it all down so you can navigate the process with confidence.
Figure Out How Much You Can Borrow
Before you start falling in love with dream homes, you need to know what’s actually within your budget. Banks will assess your income, expenses, debts, and credit history to determine how much they’ll lend you.
A good rule of thumb? Just because the bank offers you a certain amount doesn’t mean you should take it all. Think about what you can comfortably repay each month while still having room for life’s unexpected expenses.
Saving for a Deposit
Saving for a home deposit takes time, but the more you have, the better. Most lenders prefer a deposit of at least 20% of the property’s value. If you have less than this, you may have to pay Lenders Mortgage Insurance (LMI), which adds extra costs to your loan. If saving 20% feels out of reach, don’t stress—some government schemes allow you to buy with as little as a 5% deposit. More on that in a bit!
Look Into First-Home Buyer Assistance Schemes
The Australian government has several programs designed to help first-time buyers get into the market sooner. These include:
- First Home Owner Grant (FHOG) – A one-time payment for eligible buyers purchasing a new home. The amount varies by state.
- First Home Guarantee (FHBG) – Allows eligible buyers to purchase a home with just a 5% deposit without paying LMI.
- First Home Super Saver (FHSS) Scheme – Lets you use voluntary super contributions to save for a home deposit at a lower tax rate.
- Stamp duty concessions – Many states offer discounts or exemptions on stamp duty for first-home buyers.
It’s worth checking what’s available in your state to see if you qualify for any of these.
Get Your Finances in Shape
Lenders want to see that you’re financially responsible, so before applying for a home loan, take some time to tidy up your money habits. This could mean:
- Cutting back on unnecessary expenses
- Paying off outstanding debts
- Avoiding new credit applications
- Checking your credit score and fixing any errors
A strong financial position will not only improve your chances of getting approved but may also help you secure a better interest rate.
Compare Home Loans
Not all home loans are created equal, so don’t just go with the first option you come across. Consider:
- Interest rates – A lower rate can save you thousands over the life of your loan.
- Fees – Some loans have hidden costs like application fees, ongoing fees, or early exit fees.
- Loan features – An offset account or redraw facility can help you save on interest.
- Fixed vs. variable rates – Fixed rates offer certainty, while variable rates can fluctuate.
A mortgage broker can help you compare different options and find the best deal for your situation.
Get Pre-Approved
Loan pre-approval gives you a clear idea of how much you can spend and makes you a more attractive buyer. Pre-approval isn’t a guarantee, but it’s a good indication that a lender is willing to finance your purchase. It usually lasts for 3 to 6 months, giving you time to find the right property.
Budget for Extra Costs
Many first-home buyers focus only on the deposit, but there are other upfront costs to consider, such as:
- Stamp duty (unless you qualify for an exemption)
- Legal fees for conveyancing
- Building and pest inspections to check for hidden issues
- Loan setup fees (some lenders charge these)
- Moving costs and home insurance
Make sure you factor these into your budget so there are no nasty surprises.
House Hunting
Before you start attending inspections, make a list of what you’re looking for:
- Essential features – The must-haves (number of bedrooms, location, etc.)
- Nice-to-haves – Features that would be great but aren’t deal-breakers
- Deal-breakers – Anything that’s a firm no (e.g., noisy streets, high-maintenance properties)
Stick to your budget, be patient, and don’t rush into a decision.
Get a Property Inspection
A house might look perfect at first glance, but a building and pest inspection can reveal problems that aren’t visible to the untrained eye. Structural issues, plumbing problems, or termite damage can turn your dream home into a money pit. Spending a few hundred dollars on an inspection could save you thousands in the long run.
Understand the Settlement Process
Once your offer is accepted and the contracts are signed, settlement begins. This is when your lender finalises the loan, legal checks are completed, and the property is officially transferred to you.
Settlement usually takes between 30 and 90 days, during which you’ll need to:
- Finalise your mortgage paperwork
- Arrange home insurance (some lenders require this before settlement)
- Make sure you have funds ready for the final payments
On settlement day, the remaining balance is transferred, and you officially become a homeowner.
Final Thoughts
Buying your first home might feel overwhelming, but with the right preparation, it’s completely doable. Take your time, do your research, and don’t be afraid to ask for help from professionals along the way.
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