Understand the process involved in buying your first home
Buying a house can be both and exciting and daunting prospect and buying your very first home, even more so.
There will likely be terminology you’re not familiar with and having never bought a house before, the process and steps involved may be a little bit overwhelming. If you are a first home buyer wondering where to start and want to learn more about the process, then keep reading.
How much can I spend on my first home?
The very first thing you need to consider is how much you can afford to spend on your first home.
Because everyone’s situation is very different, it is important that you create a budget and include things such as your income and current financial commitments. The MoneySmart website has a great budget planner tool to help you work out your budget and financial commitments.
You can use our Borrowing Power Calculator to find out how much you can borrow to purchase your first home. We also have a number of other useful calculators such as an Extra Repayment Calculator, How Long To Repay Calculator, Buying Costs Calculator, and a Rent vs. Buy Calculator to help you determine how much better off you’ll be buying versus renting.
How much deposit do I need as a first home buyer?
Once you’ve established how much you can comfortably afford to spend on your first home, you will need to work out how much deposit you will need. The deposit you will need will depend on a few factors such as the price of the house, the finance company, your credit rating etc.
Do some house price research around the areas you are looking to buy in. Work out an average price for the type of house you want in the area you want to live in.
Generally, financiers want to see a 20% deposit, however there are many financiers who will also accept a 5% deposit. It is also important to factor in associated buying costs and this is where our Buying Costs Calculator can help.
What Government Schemes are available and how do I find out if I’m eligible?
The Government’s First Home Loan Deposit Scheme is available to help first home buyers build or buy a new home. Generally, if you have less than a 20% deposit you will be required to pay Lenders Mortgage Insurance. The First Home Loan Deposit Scheme allows eligible first home buyers to buy or build a new home with a deposit of as little as 5%. There are some eligibility criteria including an income test, prior property ownership test, minimum age and deposit requirements. For more information or to check your eligibility, visit First Home Loan Deposit Scheme.
You may also be exempt from paying stamp duty on your new property as a first home buyer. For the most up-to-date information on stamp duty and rebates available for first home buyers, visit the Revenue Office link for your state below:
- Australian Capital Territory — Revenue Office: Conveyance duty calculator
- New South Wales — Revenue NSW: Calculator — for land and property transfers
- Northern Territory — Department of Treasury and Finance: Stamp duty calculators
- Queensland — Office of State Revenue: Transfer duty calculator
- South Australia — RevenueSA calculator: Stamp duty on conveyances
- Tasmania — State Revenue Office of Tasmania: Property transfer duty calculator
- Victoria — State Revenue Office: Land transfer (stamp) duty calculator
- Western Australia — Office of State Revenue: Calculators
How do I find the best home loan rate for my first home?
When looking at buying a home, the interest rate is a very important factor. Even a 0.5% difference in the interest rate can cost you thousands of dollars over the life of your loan.
Therefore, it is essential to compare products available from a range of different financiers. With so many financiers to choose from, it is worth speaking to a mortgage broker whose job it is to assist you to find the best option to suit your needs.
It’s easier than ever to find the perfect home loan to suit your needs as a first home buyer, simply speak to our friendly Home Loan Specialist at Home Loans For U today on 1800 538 287 for an obligation-free chat.