First home buyer’s checklist

Study the market

It might seem basic, but understanding the market is a crucial first step when buying your first home. It allows you to understand what it is you really want from a property, the quality of the stock that’s out there and how your dreams translate to real life.

Make a shortlist of property must-haves and things you’d like. This can include the location, the number of bedrooms, the local area amenities, what parking considerations you need to make, and the type of property which appeals most (house, townhouse, unit). This will help you set the parameters for your search and give you ammo for conversations with both your mortgage broker and real estate agents.

In these conversations, you’ll want to look at the prices in the area you want to buy in, including recent sales as this will be the best indicator of what the market is doing. Are prices going up, or coming down? See if you can understand what factors are contributing to this, but knowing what they’re doing will help you have conversations with the professionals.

Borrowing capacity

With a sense of the market, you can now investigate how much you can borrow. The next logical step is to use our calculator, which you can find here. This will give you a basic understanding of your borrowing capacity.

Using a calculator is a good indicator, but this is also a good time to talk with an experienced mortgage broker with knowledge of all the options available to you and your specific circumstances.

Different lenders will have different criteria, products and thresholds which will influence how much you can borrow. Knowing the difference and having the right relationships with these lenders is the key to getting the right loan for your desired capacity.

Work out repayments

Knowing what you can borrow is one thing, but having a clear idea of what you’ll have to pay each week or month is just as important. Make sure to budget not just for your repayments themselves, but all the other regular costs you’ll need to cover, from groceries to bills and long-term savings goals.

Securing your dream home is one thing, keeping it is another. As a general guide, it’s best if your repayments don’t exceed 30% of your after-tax salary. This will make sure you have plenty of room to move should your circumstances change, rates move or unexpected expenses pop up. Use the calculators here to get a good idea of what your repayments will be once you start making mortgage repayments on your new loan.

If you’ve already had the discussion with your broker about borrowing capacity, you will be well placed to explore what the repayments will be and other costs you need to factor in.

First home owner grant

If this is the first time you are buying a home, you may be eligible for government assistance in the form of the First Home Owner Grant. This grant is designed to give you a little leg up when it comes to financing your first home.

It’s important to note, as with every Government scheme, it will be subject to limitations and eligibility criteria that may change. So it’s best to do your own research or talk to a professional mortgage expert when applying.

Each state is unique in their scheme, so make sure you’re aware of the differences depending on where you’re buying. In NSW, the First Home Owner Grant provides a tax free amount of $10,000 but is only available for newly built or substantially renovated homes under $1 million.

If this fits with your plans for your first home,

For more information on the grant and other schemes, check out the NSW Government Revenue NSW page.

Get ready to buy

Now that you’ve done your research, you have a good understanding of the home you want, are clear on what you can borrow and what it will cost you each month, now it’s time to buy!

Sometimes it’s as easy as making an offer, but not often. Expect some negotiation. However, as you’ve done your research, know what is happening in that particular neighbourhood and have the right loan financing behind you, you’re in a strong position to negotiate. Remember, the real estate agent acts on behalf of the seller.

You can include conditions to the contract of sale for things such as finance approvals and timeframes, details your experienced mortgage broker can help you with.

In many cases, new home sales will also have a cooling off period of two clear business days once the contract is signed.

Auctions have become the norm in many locations across Australia, so it’s worth taking the time to attend at least a few auctions and watch how the process works before you start bidding. Many people will offer advice on auction tactics, but the most important factor is knowing your own budget limit and sticking to it.

Regardless of your financial situation or the type of property you’re looking for, being prepared is one of the best ways to secure your dream home.