First Home Buyers Guide 2023

If you’re a first home buyer, the first thing you need to organise is your finances. We’ve broken it down in our first home buyer guide:

What can you afford to borrow?

This will depend on how much you already have saved, your income and any debts you may have. Most banks and mortgage broker sites offer calculators that you can use to determine your borrowing power and how much your mortgage repayments will be.

If you’ve already got your deposit saved, we recommend going into your bank or speaking to a mortgage broker to get an accurate estimate of how much you can borrow. 

How much deposit have you got?

Typically, lenders will want a deposit of at least 20%. But if you have a good credit rating and a reliable income, you could buy a house with a deposit lower than this. But you’ll need to be mindful of Lenders Mortgage Insurance (LMI). LMI enables people to buy a house with a deposit of less than 20% and is there to insure the bank in case you default on the loan. However, LMI depends on your deposit, so try to save the biggest deposit possible to save yourself from a high LMI.

It’s also possible to buy a home without a deposit by having your parents act as a guarantor. This is known as a guarantor loan.

Check out first home buyer grants 

As a first home buyer, you may be able to take advantage of a government home buyer grant to make buying your home easier. However, there are some eligibility requirements that you need to keep in mind, such as:

• You are purchasing a new home that has not been previously occupied or sold as a place of residence and includes a substantially renovated home.
• The market value of the property is $575,000 or less
• You and your spouse/domestic partner have not previously received a first home owner grant in any state or territory of Australia

When you’re looking into your finances, do some research to see if you’re eligible. 

Be aware of hidden costs 

When you’re buying your first home, there are numerous additional costs that you need to consider. These include:

• Stamp Duty
• Council and water rates
• Strata or Community fees (if you’re buying a unit)
• Building and pest inspections
• Moving and connection costs
• Borrowing costs (if you opt for a fixed home loan, you may need to pay an annual fee). 
• Government fees

Your conveyancer should make you aware of these costs but it doesn’t hurt to ask the question. 

Learn more: Hidden costs of buying a house

Once you know how much you can borrow, the next step is comparing home loans. You can do this yourself or go through a mortgage broker. When you start comparing the different lenders, you’ll also need to compare variable vs fixed term loans and their rates.

Variable rate home loans:

This is a home loan with an interest rate that may change over time. You can make extra repayments to pay the loan off faster.

Fixed rate home loans:

This is a loan that offers a fixed interest rate for a set period (usually a maximum 5 years). You might not be able to make additional repayments and there may be an annual fee. 

You can combine your variable and fixed rate home loan. So, you could opt for a fixed term loan for the first 5 years, and then have a variable rate after.

Now you’ve organised your finances, the next step in our first home buyers guide is to start researching your future home. To do this:

• Look at what you want in a house
  • Do you need 2 or 3 bedrooms?
  • Do you want a backyard?
  • Would you prefer a house, unit or apartment?
  • Do you want something brand new or are you willing to renovate?
• Look at different areas and suburbs.
  • What’s the commute like to your work?
  • Is everything you need nearby? Shops, schools, parks etc.

Engage a conveyancer

It’s never too early to engage a conveyancer. They can guide you through the buying process, review your contract and Form 1 and offer first home buyer’s advice.

This is when the house hunt really begins! To help you get your dream home, we’ve listed out a few tips:

• Take your time at open houses.

  Get there early and really use the time to properly look at the house. You may also want to come prepared with some questions for the sales agent, such as: are pets allowed?* How long has the house been on the market? Why are the owners selling? Are there any offers yet?

• See what has sold in the area.

  This will help you to negotiate when you make your offer. 

• Get pre-approval.

  Getting your home loan pre-approved can help you make offers on properties with more confidence. It can also give you faster access to finance. 

*Some strata groups may not allow pets in units or apartments, hence why you need to ask before buying.

Learn more: 

• Buying off the plan property
• Steps in buying a house

As soon as you’ve found your dream house, it’s time to make an offer. This should be made in writing and sent to the sales agent (via email or text). If the vendor accepts your offer, the sales agent will notify you and begin drafting a contract. 

Once they send the contract through, make sure you take the time to read through it carefully. You can also have your conveyancer review it for peace of mind. As soon as you sign across the dotted line, the sales agent will serve you the Form 1 if they haven’t done so beforehand. 

Your two day cooling off period begins once you have been served, and this is when you should organise a building and pest inspection. After the cooling off period, you will need to pay a deposit to secure the contract. If your contract is ‘Subject to Finance’, you will need to wait for finance to be approved by the bank. 

After this, you’ll begin to prepare for settlement.

Learn more: what happens on settlement day

Before you know it, settlement day will arrive and you’ll have ownership of your very first home – congratulations!