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Guide to buying your first home

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The home buying process

Buying your first home is an exciting time but it can also be daunting. There are so many different challenges to overcome including finding a home, buying and getting the best value home loan.

1. Decide what you want to buy

Buying a home for the first time can be overwhelming because of the plethora of options available. Before you start your search, narrow down your criteria first. Keep these factors in mind

Location or suburb of the property – Where do you want to live? The ideal suburb is a place that complements your lifestyle needs. Check if the area is close to your work, schools, and shops, and if it has access to public transportation. See if the houses in the area are within your price range, as well.

House or unit – What type of property do you want to buy? When people think of ‘first home’, they imagine a free-standing house. But there are a variety of options available like apartments or units. Every option has its own pros and cons. You need to see which one fits your needs best.

Buying an existing home or building a new one – Do you want to build or buy? You’ll have more houses to choose from if you opt for a move-in ready home, however, you may not be eligible for the First Home Owner Grant. Building from the ground up requires more effort, and you may need to consider a construction loan. The upside is you could qualify for the First Home Owner Grant.

To live in or rent out – Most people want to live in their first home but increasing numbers are buying their first property to use for investment. Knowing the purpose of your property purchase will help you make the right decision.

2. How much can you afford?

When it’s your first time buying a home, the cost of it can seem staggering. Manage your expectations by doing research and looking at your finances. Work out how much you can afford by applying for a pre-approved loan, so you don’t waste time on houses in the wrong price range. Check out our borrowing power calculator to see a rough estimate of how much you can borrow.

Here are some things to consider:

Buying by yourself – Lenders will only look at your finances and financial situation to determine how much you can borrow.

Buying with somebody else – Lenders will look at the finances of you and the person you’re buying the house with, be it a spouse, partner or family member, and determine how much you can borrow.

Your deposit saved – The bigger your deposit, the less you’ll have to borrow from the lender. Most lenders require at least a 10% down payment. Take note, larger deposits may mean lower interest rates as it lowers the risk to lenders. With a 20% deposit or more, you can avoid paying Lender’s Mortgage Insurance (LMI).

Your income – Your debt-to-income ratio impacts the amount you can borrow. Include and document all your sources of income when applying for a loan.

Your expenses – Lenders want to know your expenses because it helps them assess how much you have left over to make loan repayments.

First Home Owner Grant (FHOG) – The FHOG is a one-off grant that is payable to eligible first-home buyers. The rules vary from state to state so to find out if you qualify by visiting this website.

3. Other costs to consider

Buying a house isn't just about paying the price of the property. There are some extra costs all buyers should be aware of.

Stamp duty – You’re required to pay a state tax called stamp duty within 30 days of the property settlement. Stamp duty is decided by separate state and territory governments, so rates vary depending on your location. Some states give special discounts for First Homeowners who meet certain criteria.

Lenders Mortgage Insurance (LMI) – Lender's Mortgage Insurance is an insurance policy that protects the lender from financial loss if the borrower can’t keep up with their home loan repayments. Borrowers who provide a deposit under 20%, may be required by their lender to pay for an LMI.

Property valuation – This is when a professional will assess the value of the property based on key factors. Most lenders may need you to pay for a valuation of the property when applying for a loan.

Conveyancing – Conveyancing is the process of transferring ownership of a legal title of land (property) from one person or entity to another. When you buy a property, you should appoint a conveyancer or solicitor to handle the conveyancing for you.

4. Getting pre-qualified

Save yourself time by pre-qualifying for a loan before you start your home search. Pre-qualification is a quick and easy way to find your borrowing power. The lender may give you an estimate of how much you can borrow based on the information you provide.

Note, a pre-qualification doesn’t guarantee that you’ll be approved for a loan.

Apply online – Pre-qualify for a loan by visiting loans.com.au. You’ll get your results in minutes!

Know what you can afford – Once you’ve got your budget set, you won’t waste time looking at properties that are out of your price range.

5. Making an offer

There are two ways to buy property in Australia. You can make an offer to purchase via a contract or by bidding at an auction.

Contract vs Auction – Buying a house through private sale means going through negotiations with the seller or their real estate agent and exchanging contracts. Meanwhile, property auctions are public sales where the property will go to the person with the highest bid.

The cooling off period – If you choose to buy a house from a private seller, you’ll have a cooling off period wherein you can back out of the deal and only suffer minimal fines. This period may vary depending on the state or territory.

6. Apply for a home loan with loans.com.au

Now you have made an offer and had it accepted either at auction or through a private sale, this is what happens at loans.com.au through to settlement.

Just follow the simple steps below to lock in a home loan with a super-low rate.

First, start your application

Visit loans.com.au and fill out an online application. You will be prompted to book a quick phone appointment with one of our online loan specialists to review your application before submitting it.

You will also receive login credentials for onTrack, our easy-to-use online portal. You can use onTrack on any computer or mobile device including your mobile phone.

What you do What we do
Fill out an application online. Contact you at the requested time to discuss the information you provided.
Book an appointment with a loan specialist.

Second, speak to a specialist

Talk with one of our loan specialists. They will review your application and help you choose the most appropriate loan for your needs.

What you do What we do
Prepare your financial information such as income and expenses. Verify the information you provided.
Book an appointment with a loan specialist. Tailor a loan product to achieve your goals.
Provide access to our onTrack application portal.

Third, log in an upload your documents

Supply supporting documents such as pay slips and bank statements. You can do this using onTrack.

What you do What we do
Log in to onTrack. Verify the information you provide.
Upload supporting documents to your application checklist. Contact you to assist with the application process.

Fourth, order a property valuation

We will arrange for a property valuation to be done on the home you are buying/refinancing.

What you do What we do
Nominate a time for the valuer to come. Order the valuation.
Attend the valuation or arrange for a contact to attend. Review the valuation.

Fifth, wait for loan approval

If the valuation falls within the expected range and our credit assessment is positive, we will approve your loan.

What you do What we do
Check onTrack for application status. Notify you of your success.
Final approval letter of your loan.

Sixth, the loan documentation will be delivered

At this stage, you will receive your mortgage documents and loan agreement pack via onTrack.

What you do What we do
Complete your loan documents and return them to us. Call you to make sure you have received the documents, and everything is in order.
If applicable, provide us with your completed First Home Owner Grant (FHOG) application so we can lodge it on your behalf.

Lastly, the settlement

We will contact your conveyancer or solicitor to arrange a settlement of the purchase.

What you do What we do
Arrange the necessary funds to complete the purchase to be transferred to your conveyancer. If further legal documents are required for settlement, we will contact your conveyancer
Notify your conveyancer that we will be your lender for settlement. Review the valuation
Arrange a conveyancer to contact us to book a settlement.

7. Repaying your loan

Once settlement has been successfully confirmed, you will receive your login credentials for Online Services so you can manage your loan online.

What you do What we do
Expect a welcome call from our Customer Care team with all the info needed to log in. Our Customer Care team will touch base with a quick ‘Welcome Call’ to discuss the details of the loan and the repayments, set up Online Access, and answer any questions.

Why get your first home loan with loans.com.au

At loans.com.au we are proud to offer one of the most competitive interest rates in Australia for customers who want to buy their very first home.

You could save thousands of dollars on your home loan and pay it off sooner by choosing loans.com.au.

Benefits include:

  • Low interest rates, saving you money
  • Award-winning home loans packed with features
  • No expensive branch network and a game- changing online model which means we can pass on ultra-low interest rates to our customers
  • Simple online application process with our innovative onTrack system
  • Borrow safe in the knowledge that we are secure, powered by Firstmac, which has been in business for over 38 years

To find out how much you can borrow, just use our handy borrowing power calculator.

If you are ready to apply for a loan, you can get started now by filling out one of our easy online applications here. It only takes a few minutes.

Otherwise, keep reading to learn more about the journey to buying your first home.

The onTrack Advantage

onTrack is our innovative online portal which allows you to complete your home loan application entirely on your handheld device or computer from initial contact through to settlement and beyond.

Using onTrack means that you are able to complete your loan application in your own time. You don’t have to wait for a bank branch to open to complete your home loan!

onTrack allows you to download all required forms and documents as well as allowing you book an online appointment with one of our loan specialists at a time that suits you. You can securely submit your forms and supporting documents.

About loans.com.au

loans.com.au is an award-winning online lender that is proudly Australian and based in the heart of Brisbane, with offices in other capital cities.

Since we were founded in 2011, we have grown to become an industry leader with thousands of happy customers in every state and territory.

From our local call centre, our service team helps hundreds of customers around the country apply for and manage their loans, every day. Home buyers are choosing us because we don’t have expensive bricks-and-mortar branches and we pass the savings on to them through super-low interest rates.

But we are more than just a great low rate.

We have taken the hassle out of getting a home loan by cutting through the old-fashioned processes of traditional lenders to put you in control.

With the support of our local service team you can move through your online application at your own pace and with full knowledge of what is happening at each stage.

You can borrow from loans. com.au secure in the knowledge that we are regulated by the Australian government.

Our operations are covered by the National Credit Code which is enforced by the financial services watchdog, the Australian Securities and Investments Commission.

We are powered by the financial strength of Firstmac, which is Australia's largest non-bank lender. Firstmac has been operating successfully for over four decades.

If you follow rugby league you may have heard of Firstmac because it is a Premier sponsor of NRL team, the Brisbane Broncos.

loans.com.au is Australian-owned and-run, has a long track record of success, and has super-low rates that can save you thousands of dollars. That’s why we are the Home of Smart Money.

Jargon Buster

Terms Description
Borrowing Power Your borrowing power or borrowing capacity is the amount of money a lender will loan you to buy a home.
Construction loan A type of loan especially designed to support people who are building their own home. With a construction loan you draw down your loan as needed to pay for construction progress payments.
Conveyancer Licensed conveyancers are property law specialists who work on behalf of clients buying or selling property.
Cooling-off period This is a period after you exchange contracts where you may get out of the contract as long as you give a written notice. If you use the cooling off period, there is a fee payable. The cooling off period varies between Australian states and there is no cooling off period in Tasmania, or on properties bought at auction in other States.
Deposit Your deposit is the amount of your own money that you are putting in to your home purchase.
Lenders Mortgage Insurance Lenders' mortgage insurance protects your lender in the unfortunate event of you defaulting on your home loan.
LVR/Loan To Value Ratio LVR/Loan To Value Ratio is the value of a property in comparison to the amount of money being borrowed through a home loan. LVR is calculated as a percentage, and is used by lenders to assess the risk of accepting a loan application.
onTrack Our online portal which allows you to complete a home loan application entirely on your mobile device or computer from initial contact through to settlement and registration for online services.
Pre-qualify Also known as pre-approval and preliminary approval. When you pre-qualify for a home loan, a lender is agreeing to lend you a certain amount of money subject to further checks on your finances and the property’s value.
Property Valuation A property valuation is the price a bank or non-bank lender values a property. They will consider things like the land, the dwelling itself, the neighbourhood, access to amenities, demand for the area and many other factors.
Settlement Settlement is when you pay the rest of the sale price (after the deposit) and become the legal owner of the property.
Stamp Duty Stamp duty is a tax on property transactions. It's charged by different states and territories and the amount charged varies with each.

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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