Buying your first home comes with aaaallll the feels. Excitement, anticipation, nerves, confusion, uncertainty. The list goes on and on.
This First Home Buyer Guide is here to answer your burning questions, walk you through the process, and give you the information you need when you don’t know where to start. We’ll cover everything from saving for a deposit to Government grants and incentives to paying back your home loan.
What’s in the First Home Buyer Guide?
How do home loans work?
We’ve all heard of home loans. But how do they actually work in Australia? In simple terms, a home loan is the money a bank or lender gives you so you can buy a property. You have to pay this money back over an agreed number of years (usually 30), as well as the interest accrued on the home loan (that’s how banks make their money).
Our First Home Buyer Guide will:
- Define a home loan
- Break down the difference between a home loan and a mortgage
- Explore other important factors like fees, deposits, and Government incentives
How much can you borrow?
We’re talking about ‘borrowing power’. The bank will only want to lend you as much as you can safely pay back. Therefore, your borrowing power is based on your total income less your total expenses.
Our First Home Buyer Guide will:
- Define ‘borrowing power’ or ‘borrowing capacity’
- Touch on how you can increase your borrowing power
Saving for a deposit
The deposit required for a property purchase is typically between 5% and 20% of the purchase price. But, there are ways to secure a property with a deposit under 20%. You may need to pay Lenders Mortgage Insurance (LMI) – an insurance, paid by you, that protects the lender. It’s typically taken out on more ‘risky’ loans where the deposit is small.
Our First Home Buyer Guide will:
- Define Lender’s Mortgage Insurance
- Other ways to avoid costly LMI (like Government schemes)
- Setting budgets and savings goals
- Other ways to assist with your deposit, like Gifted Funds or a Guarantor
Grants and incentives
Governments in Australia have implemented several different types of First Home Buyer Grants and Schemes to help you get a foot in the door. Handy, right? These grants and schemes are either administered by the State Government or the Federal Government – so there are slight differences in the way grants and schemes play out depending on the state or territory you live in.
Our First Home Buyer Guide will:
- Define the federal program: First Home Buyer Guarantee Scheme
- Explore state-based programs, including First Home Buyer Grants (FHOG), Stamp Duty Waivers (AKA transfer duty) and Shared Equity Schemes.
How to get a home loan
The million-dollar question. Now you know what a home loan is, how do you go about, you know, getting one? Well, it’s a process, starting with knowing your goals, meeting with a broker and applying for pre-approval. Once that’s sorted, you can begin searching for a home and when you find ‘the one’, make an offer! Once your offer gets accepted (booyah!) it’s time to wait for unconditional approval and for settlement day to roll around.
Our First Home Buyer Guide will:
- Break down each step of the process, from knowing your goals all the way to settlement
Paying back your home loan
Once you’ve secured a home loan, you need to pay it back (no surprises here). But there are a few decisions to make when you’re working out the right home loan for you (but don’t worry, these decisions are something your mortgage broker can help you with). You need to weigh up the type of repayments, interest rate types, and any additional home loan features.
Our First Home Buyer Guide will:
- Weigh up principle and interest versus interest only loans
- Compare interest rates types: fixed rates versus variable rates (or a little bit of both, a split rate)
- Touch on home loan features, like an offset account or redraw facility
Searching for a property
The fun part, searching for a property. Before you get started, it’s a good idea to narrow down your search by checking in with your values, priorities and non-negotiables. You might also want to weigh up purchasing a house versus an apartment (there are pros and cons of both options). Then, once you’ve actually started searching with your filtered criteria, we’ve got some handy tips to help you inspect a property and spot any red flags.
Our First Home Buyer Guide will:
- Give you questions to ask yourself or discuss with your partner if you’re going in together
- Explore buying an apartment versus buying a house
- Tips to inspect a property, including lifestyle assessment, physical assessment, additional considerations and red flags
Who do you need on your team?
We know, the process of getting a home loan can seem overwhelming at first. But the good news is you don’t have to go at it alone – there’s a list of experts you can engage to help you along the way. A mortgage broker (that’s us!) is the middle person between you and the lender (and an all-round helpful expert to have on your team). Plus, our services are 100% free as we get paid by the lender to get you a great loan.
Our First Home Buyer Guide will:
- Run you through the experts you can have on your team, like mortgage brokers, conveyancers, pest inspectors, building inspectors, and buyer’s advocates.
What to do when you find a home
So, you’ve found your dream home. What now? It’s time to ask for some essential documents and then make an offer – usually through a private sale or auction. All going well, your offer will be accepted and your lender will *officially* agree to lend you money! This is called unconditional approval.
Our First Home Buyer Guide will:
- Define essential documents, like the Section 32 and Contract of Sale
- Outline the role of your mortgage broker when making an offer
- Outline the role of your conveyancer when making an offer
Settlement day
Finally, settlement day. The day when you officially pick up your keys and starfish in your living room. But what actually happens?
Our First Home Buyer Guide will outline what happens on the day, things like:
- Funds changing hands
- Paying stamp duty (AKA transfer duty)
- Finalising paperwork
- Picking up your keys
Glossary and key terms
Our First Home Buyer Guide includes a glossary of key home loan terms (a super handy resource when you’re just getting started). Plus, you can impress your friends when you rattle off terms like offset account and Lender’s Mortgage Insurance.
When are you ready?
One of the most common questions we get at Finspo is something along the lines of, “but how do I know if I’m ready?”
You can kick things off and book your first meeting with a broker no matter what stage you’re at – you might have a deposit ready and already be searching for a home, or you might be a little way off purchasing a home but want to plan ahead.
Questions about the First Home Owners Guide?
Why do I need this First Home Buyer Guide?
Buying your first home is overwhelming. How do you make the right move? Who do you need to help you? What grants and schemes are available? And what even is a variable interest rate?
See what we mean? This First Home Buyer Guide has been put together by our team of home loan experts. It’s inspired by years of questions and experience, bundled up into a handy 30 pages. The goal is to help you buy your first home in a way that works for YOU.
Who is the First Home Buyer Guide for?
This guide is useful for anyone and everyone interested in buying their first home in Australia. You might be ready to buy ASAP, just weighing up the idea, or still a few months (or years) off and want to make sure you’re prepared for when the time does come.
Is the First Home Buyer Guide free?
Yes! The First Home Buyer Guide is free (but packed with so much value it probably shouldn’t be).
I’ve already bought a home or started the process – will this be useful?
Absolutely. The first home buyer guide covers everything from the definition of ‘home loans’ to what happens on settlement day. So if you’ve started the process, there’s bound to be information that’ll help you along the way. If you’ve already bought a home, this guide can serve as a useful refresher (and maybe help you purchase your second home).
About Finspo
Finspo is a team of mortgage brokers (or home loan experts, as we like to call them) on a mission to help Aussies feel good about their home loan moves. All so you can get to, well, wherever you’re going.
