When you start becoming more serious about buying a home, it’s easy to get excited about the fun parts: decorating, what colours you’ll paint, what aesthetic you’re aiming for, and possibly all these things constructed in countless mood boards. But after all the excitement, there lies the more daunting parts of navigating through finances, home loans, and the property market.

With the current property markets surging in Australia, many first-time buyers are starting the homeownership journey. In 2021, new homebuyers benefited from the historically low-interest rates and government support through programs like the First Home Loan Deposit Scheme, that has allowed new potential to get over the deposit hurdle.

As time goes on, we see property prices increase, and 2022 may not reap those same benefits, but there are still important tips to consider as you maneuver through the process of purchasing your first home.

Are You Eligible for a Home Loan?

By contacting several lenders, you’re able to scope out just how much money you’ll be able to borrow. Based on your current debts and financial situation, you can have a more realistic view of what and where you can buy your first home.

Pre-approval will indicate how much the bank is willing to lend you, and while this doesn’t guarantee a formal approval, it does help simplify the process when you find the home you’re looking to buy.

Government Assistance

As well as getting a pre-approval on a loan, you may want to seek out any financial assistance that you may be eligible for. You may be eligible for some financial assistance options like:

  • First Home Owner Grant: Eligible first-time home-owners may be offered a one-off grant from state governments
  • Stamp duty concessions: Certain state and territory governments may offer some incentives for first home buyers that involves stamp duty concessions
  • New Home Guarantee: The New Home Guarantee is an Australian government initiative that supports eligible first-time home buyers to buy their first home sooner in conjunction with participating lenders
  • First Home Super Saver Scheme: With the First Home Super Saver Scheme (FHSSS for short), first-time home buyers may be eligible to withdraw voluntary super contributions you’ve made to put towards your first home deposit

Plan For Upfront Costs

The purchase price is always the first thing we think of when purchasing a home, but it’s important to realise other upfront costs to plan and save ahead of time.

    • Seeing a huge number for the purchasing price can feel unreachable. Many cannot purchase a home outright and will need to take out a loan. A lender will typically ask for a 10-20% deposit, which gives you a more attainable goal to save for.
    • A loan application fee covers things like credit checks, appraisals, and other administrative tasks done by your lender.
    • If your deposit is lower than 10-20%, your lender might require you to make a one-off payment for the lender’s mortgage insurance that covers them if you are unable to pay your loan. 
    • Government charges like stamp duty, mortgage registration, and transfer fees vary depending on where you live and where your new home is located.
  • Inspections of your property, pests, and strata are important to spend money on before purchasing. These inspection reports allow you to be made aware of any potential structure concerns or any financial or maintenance issues you may be facing.
  • Moving can be taxing, so make sure to either budget for moving expenses or make sure you can save up for the furniture costs if you don’t have much to move and are planning to start from scratch.

Prepare For Ongoing Costs

Aligning the beginning costs is the first step, but it’s equally important to budget the ongoing expenses when it comes to homeownership. You want to ensure that even after purchasing your home successfully, you have budgeted for the long term and allow you financial comfort in the future.

  • Interest charges
  • Loan repayment
  • Council rates and fees
  • Insurance
  • Renovations
  • Utility costs

Finding the Right Loan for You

oith so many types of home loans available in such a vastly competitive market, it’s a good idea to look at the different types of loans that allow you to get the best rate. Different mortgages will suit different situations, so even if you are self-employed, there are loans and lenders just right for you. A trusted financial advisor can help you choose variable to fixed, interest-only, investment, or other types of loans.

Need Advice When Buying a Home in Australia?

Buying a home can be such a complex and confusing process on your own. At EDA Property, we’re here to offer honest and transparent advice when you’re stepping into a new phase of life. First-time buyers in Melbourne can ask questions and gain confidence when embarking on purchasing a new property.

Contact us today for a free consultation, and let’s make buying your next home a worthy investment.