Our First-Home Owners Service
Taking the first step on your home buying journey
Last year almost 110,000 Australians bought their first home, you can too!
We’ve provided this quick guide to help first home buyers at each key stage of the home buying journey. This will give you a framework that you can follow when buying your first home, while avoiding costly mistakes.
Step 1 - Calculate your living expenses
Before you start hunting for your new home, the first thing you need to figure out is
how much you can afford to spend.
The easiest way to do this is to add up all your current living expenses (you can use our template below) and subtract the total from your income.
The amount leftover is the amount available to put towards home loan repayments or put towards saving for a deposit.
Step 2 - Work out how much you can borrow
There can be huge differences in how much you can borrow depending on the lender you apply with because of the way each lender assesses your income, debts and expenses.
If you would like to improve your borrowing power:
- Reduce your credit card limits or cancel your credit cards.
- Cut down on your living expenses at least three months prior to applying for a home loan.
- Pay off or cancel “buy now pay later’ services such as Afterpay or Zippay as lenders consider these are ongoing liabilities even if they are short term.
- Apply for a longer loan term on your home loan. E.g. the amount you can borrow increases with a 30-year loan term compared to a 25-year mortgage.
Step 3 - Work out upfront costs when buying your first home
There are certain upfront costs when buying a property that you need to take into account.
Generally, these fees can cost up to 3%-5% of the property value with stamp duty being the most expensive single item cost. As first home buyers, you may be exempt from stamp duty. For example in New South Wales, on a $650,000 existing home
purchase, first home buyers can save up to $24,585 in stamp duty.
Step 4 - Save for a deposit home
No doubt you’ve heard of the 80/20 rule in home loans. You provide a 20% deposit
and the lender will lend you the remaining 80% to make up the purchase price.
That means on a $600,000 purchase, you’d require a deposit of $120,000 (20%). That is a lot of money to save especially if you’re renting.
These days however, first home buyers with less than 20% saved up have a few
options available to them.
Step 5 - Government grants & schemes for first home buyers
First home buyers have access to a range of government grants and schemes which
can significantly reduce your property buying costs. The most prominent ones are:
The First Home Owners Grant (FHOG):
It is a one-off grant for first home buyers purchasing a new home or building a new home.
Stamp duty exemption or concessions:
Stamp duty is exempted or discounted for first home buyers up to a
certain price threshold. The price threshold depends on the state you’re
looking to buy in and whether it’s an established or new home.
The First Home Loan Deposit Scheme (FHLDS):
This federal government scheme essentially allows first home buyers to
buy a modest home with a 5%-20% deposit while avoiding the high cost of
Lenders Mortgage Insurance fees.
Step 6 - Apply for a pre-approval so you can search with confidence
Over the years, we’ve seen many first home buyers successfully bid at auction
only to get declined for a loan.
This is one of the key reasons we strongly recommend you get pre-approvals from at least two lenders before you consider putting down a deposit on a house.
A pre-approval or a conditional approval simply means a lender has looked at your income, expenses and your overall financial situation, and agreed to lend you an amount towards the purchase of your home.