Buying a new home can be a daunting task, especially if you are a first home buyer. There are so many things to learn, research, consider, from finding the right neighbourhood, understanding Government Grants & securing finance.
With many years of experience in the financial and lending industry, Nicky Orchard, and the team at Orchard Mortgage Brokers understand how overwhelming it can be to navigate the home buying process. We will share a guide on things you need to think about when buying your first home in Australia.
1. How Much Money Do I Need to Buy a Home?
Before you start looking for a new home, it’s important to determine your budget and find out your borrowing capacity.
You might need our help to work out how much you can afford to spend on your first home. There are a number of costs you need to consider when buying a home – some costs include the house deposit, legal costs, building & pest inspections, real estate costs, insurance and monthly mortgage payments.
We encourage our clients to be organised and ask a lot of questions before they start house hunting. We find that it gives our clients confidence and a much clearer path when looking for a house.
Gather estimates of your income and expenses information.
Knowledge is power! This will help you narrow down your search and prevent you from wasting time looking at homes that are outside of your price range.
According to Moneysmart.gov.au – Pre approval can last for 3-6mths.
Having pre approval also sends a message to real estate agents that you are serious and ready to buy!
2. First Home Buyers Pre Approval
Getting pre-approved for a mortgage is a common step in the home buying process for many people. It will give you a clear idea of how much you can afford to borrow and help you determine your budget.
When researching lenders & loans for a home loan, it is important to pay attention to the interest rate. Since a home loan is a long-term debt, even a small difference in the interest rate will add up over time. It’s so important to crunch the numbers.
Choose the right home loan for your current situation & needs. It’s important that you are able to live comfortably afford your mortgage payments over the long period of time.
3. Buying Your First Home
Finding the perfect home for your family can be a daunting task. It’s a juggling act between what you can comfortably afford and the lifestyle that you want!
Make a list of your ‘must-haves’ and ‘nice-to-haves’. ‘Must-haves’ are things that you can’t do without, such as property size, layout, public transport, and schools.
‘Nice-to-haves’ are things that you could do without for now, such as design, fittings, and outdoor space.
By focusing on your ‘must-haves’, you can prioritise the things that matter most and narrow down your search for your first home.
4. How Much Do I Need For A House Deposit?
It depends. Unfortunately, everyone has a unique financial situation, and there is not one magic figure for everyone. If you are thinking about buying your first home, and you want to know how much deposit you need, we encourage you to book an appointment with us.
Here are three tips for first home buyers when saving for a deposit:
- Set a budget: Determine your monthly income and expenses and create a budget that allows you to save for a deposit. You may need to cut back on unnecessary expenses, such as entertainment or dining out, to save more money.
- Consider government programs: Many state and federal governments offer programs to help first home buyers save for a deposit. Research these programs and see if you’re eligible for any of them. If you’re stuck and overwhelmed, reach out and we can point you in the right direction.
- Look for ways to increase your income: Consider taking on a part-time job or freelance work to increase your income. You could also sell unwanted items or rent out a spare room to bring in extra money.
Once you set an achievable and realistic budget and start saving, you will begin to feel like buying your own home can be a reality. We absolutely love seeing our clients make this happen – it’s not impossible!
5. Should I Consolidate My Debts Before Buying My First Home?
Yes, we consider consolidating debts a smart option.
Consolidating debts is one idea for people who want to get their first home loan because it can help you get a better interest rate on your mortgage. When you consolidate your debts, you combine all of your debts into one loan with a lower interest rate. This can potentially help you save money on interest payments and reduce your overall debt.
In our experience, consolidating your debts may help you manage your finances more effectively, which is an important factor to consider when applying for a mortgage.
Australian Government Grants - Home Guarantee Scheme (HGS)
It’s important to consider current available government grants and schemes for first home buyers. One such scheme that may be of interest to you is the Australian Government Home Guarantee Scheme.
This is an initiative that is designed to assist eligible home buyers in purchasing their first home sooner. The National Housing Finance and Investment Corporation (NHFIC) administers this scheme, which is on behalf of the Australian Government.
The goal is to help Australians get into the housing market.
32 Participating and authorised lenders are able to offer HGS to home buyers.
There are three governments schemes with individual criteria requirements.
1. The First Home Guarantee (FHBG)
The First Home Guarantee (FHBG) – to support eligible first home buyers to buy their first home sooner, with a deposit as little as 5%. 35,000 places are available each financial year — NHFIC, source
2. The Regional First Home Buyer Guarantee (RFHBG)
The Regional First Home Buyer Guarantee (RFHBG) – to support eligible regional first home buyers to buy a home in a regional area. From 1 October 2022, 10,000 places are available each financial year to 30 June 2025. — NHFIC, source
3. The Family Home Guarantee (FHG)
The Family Home Guarantee (FHG) – to support eligible single parents with at least one dependent child to buy a home, with a deposit as little as 2%. 5,000 places are available each financial year to 30 June 2025. — NHFIC, source
Overall, the Home Guarantee Scheme is a fantastic scheme for first home buyers. With the support of the NHFIC and the Australian Government, eligible home buyers may be able purchase their first home sooner and take advantage of the many benefits offered by the scheme.
Let Orchard Mortgage Brokers Help You
Purchasing your first home might feel like a complex process, but with the right guidance and preparation, it can also be an exciting and rewarding experience.
Take the first step towards finding your dream home and let Orchard Mortgage Brokers take care of the hard work for you. Our friendly Maroochydore team boasts a wealth of experience, knowledge, and solutions for people in all kinds of scenarios.
We can help you understand your options and start a conversation today.
Licensing statements: Credit Representatives 364849 and 532460 are authorised under Australian Credit Licence 389328 General disclaimer: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.
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