With the average price of a first home climbing to many times annual income, you don’t want to make a mistake by purchasing the wrong home, over-borrowing, or getting an inappropriate loan for your needs.
Your income and living costs will determine how much you can borrow for a home, and how much you can afford to pay for a property. You can use our borrowing power calculator to give you a rough idea. Knowing what you can afford will help you to narrow your search and avoid wasting time on properties that are out of your price range.
Buying a property costs more than just the purchase price, there are a number of upfront costs to buying a home you need to consider. The costs include stamp duty, pest and building inspections, and a valuation. If you don’t have a deposit of 20 per cent of the home’s value or more, you will also need to get Lenders Mortgage Insurance which is a one-off cost that's added to your home loan.
To save a deposit, start by putting together a budget. This will help you control spending and achieve regular monthly savings. It will also give you a good idea of when you will be in a position to buy and what repayments you could afford.
There are many different types of loans with different features such as loans with or without an offset, fixed or , principal-and-interest or interest-only repayments, and construction loans. It is worth spending the time to understand these.
When you are ready to look seriously for a property, apply for preliminary approval. This will let you make an offer with confidence and will encourage vendors take you more seriously because they know you can get finance. You can apply online or make an appointment for a call with one of our lending managers.
State Governments have various schemes to help first homebuyers enter the market. Depending on the state you live in, this can include cash grants and whole or partial stamp duty waivers. Find out if you are eligible to the benefits of First Home Owner Grant (FHOG) where it can offset the effect of the GST on your home ownership.
You will need to appoint a solicitor or conveyancer to provide advice and information about the purchase of the property, prepare the documentation and conduct the settlement process.
Now it is time to find the right home and buy it. When you find an appropriate home that seems to be affordable, here are our tips on negotiating a good price.
Now it is time to apply for a home loan. Make sure that you shop around for the best price and include online lenders such as loans.com.au in your search. Online lenders consistently have the most competitive rates and the difference can add up to tens of thousands of dollars over time. Best of all, it only takes a few minutes to take the first step with loans.com.au.
Just sign your documents, including your mortgage contract, and you are ready to go.
The final stage in the loan process is settlement, where your solicitor or conveyancer meets with your lender and the seller’s representatives to exchange documents. They organise for the money to be paid to the seller.
Congratulations – you have succeeded in buying your first home!