Buying a home for the first time is an exciting experience, with much to think about and many decisions to be made!

Purchasing a property for the first time can also be overwhelming, with borrowers unsure of the process, including applying for a home loan, what lender to use, how much deposit is needed, how much they can afford, how to gain approval, Grants they may be eligible for, and where to begin their property search.

Your mortgage broker can help you with all these steps and more, and here we’ve compiled some tips to assist you when buying your first home to make the process as smooth as possible.

Budget

As much as you’d love to buy your dream home straight off the bat, realistically your first home will be a stepping stone towards your final property goal.

It’s important to have a pre-determined budget in place when first considering purchasing a property, and then sticking to it, or adapting it accordingly, once you have a mortgage.

Working to a budget from the outset will help you have a realistic idea of how much you can afford to borrow.

As tempting as it may be to say you’ll sacrifice your lifestyle to commit to a larger loan and therefore your dream home, it’s very important to ensure you can comfortably afford your mortgage repayments.

As part of this process, try to do away with as much debt before you apply for your first home loan. This includes credit cards and personal loans, where possible.

Deposit

First home owners, or any home owners, are often understandably concerned about how much deposit they will be required to put down, and how to come up with this amount.

Firstly, determine how much deposit you will need. Your mortgage broker can help you with this. Obviously, the higher your deposit, the better, but essentially you just need to have an adequate deposit for the property you are seeking to purchase.

Typically, your deposit should be 20% of the sale price of the property, however this can vary. Essentially, if you can afford to pay more than 10% deposit towards your property, you should seriously consider doing so, as this will put you in good stead with your lender and lower your mortgage payments from the outset.

Saving for a deposit can seem like an almost impossible goal, but there are a few tips to help you with this.

It’s important to remember that a deposit will assist in a number of ways. It will prove to your lender your capability to save over a period of time, and it will give you equity in your property from the beginning, requiring you to pay less interest.

On a whole, Australians are now purchasing their first property later in life, and with housing prices rising, having a deposit is a vital step in entering the property market.

Remember, your mortgage broker or lender can help you determine the amount of deposit required, and there are also online calculators available to help you with this.

Financial Assistance

As of 1 July 2017, voluntary contributions of up to $30,000 can be made by individuals to their superannuation to assisting in purchasing a first home. The contributions can be withdrawn to use as a home deposit.

The newly introduced First Home Super Saver Scheme enables individuals to save for a home deposit faster, with the ability to boost their deposit savings by a minimum of 30% compared to an everyday deposit account.

Some employees will be able to make pre-tax contributions via salary sacrifice arrangements, while self-employed individuals or those whose employers don’t offer salary sacrifice will be able to claim a tax deduction on personal contributions.

An added bonus as a first home buyer is that you may be able to apply for the First Home Owners Grant, designed to help first home buyers Australia-wide. Typically this Grant applies to new homes only and varies in each State. Many states also offer concessions off stamp duty.

Your mortgage broker can help you determine if you qualify for the First Home Owners Grant and the relevant incentive.

Ideally you should apply for the First Home Owners Grant when you initially apply for your home loan. Again, your mortgage broker can advise you in this regard and assist in your Grant application.

Depending on your lender and the amount of deposit you have, you may need to purchase Lenders Mortgage Insurance, which is a protection for your lender if you default on the loan.

Your mortgage broker is invaluable when buying your first home, including ensuring you are aware of available Grants and incentives, taxes, ongoing fees, building and pest inspection fees, conveyancing, and any additional costs related to the sale.

Your mortgage broker can inform you regarding Lenders Mortgage Insurance, stamp duty, and interest rates relevant to your loan. Your broker can also advise if any of these expenses can be added to your home loan.

The Property

Although the excitement of potentially buying your first home will be tremendous, remember to also be realistic. As well as sticking to your budget, check to make sure you’re not paying too much, by seeking professional advice and sourcing pricing for similar houses in the area.

Ensure you are confident of your purchase and have received professional advice before making an offer or signing a contract. Going through a thorough checklist is another effective way to ensure nothing is overlooked.

Your checklist may include important issues such as:

  • Location of the property, including Council rules
  • Land, including boundaries and trees
  • Internal and external condition of the house, including:

     -  Gutters

     -  Paint

     -  Roofing

     -  Fences

     -  Wall cracks

     -  Structure

     -  Property title

Engaging a professional to undertake a thorough building and pest inspection is also crucial to avoid unnecessary disappointment and/or expense down the track.

Considering buying a property is likely one of the biggest financial commitments you’ll make, and it’s natural to feel a little uncertain, but by being realistic, doing your research, and adhering to advice from professionals, you’ll be well on your way to your first exciting property purchase!