First Home Buyer Guide

You’re a first home buyer and unsure where to begin. Friends and family are mentioning things like borrowing power, deposits, and government grants, and it can all feel overwhelming. Don’t worry—this is normal, especially when you’re just starting out.

Use this guide as a simple starting point to understand key terms and help you take the first steps toward buying your dream home. Whether you’re ready to buy now or planning for the future, it’s a good idea to get prepared. That way, when you find the right property, you’ll be ready to act quickly.

Your Professional Team

• Mortgage Broker: We’re here to support you throughout your purchasing journey. We’ll provide an estimate of how much you can borrow, help you establish a budget, and guide you every step of the way in getting your loan through the banks.
• Conveyancer: Your conveyancer will assist you during the property purchase, help you understand the purchase contract and legal terms, and represent you during the settlement process.
• Friends and Family: Rely on friends and family who have experience buying property. Learn from their challenges and gather any advice or support they can offer.

Understanding your Finances (Borrowing Power)

• Understanding Borrowing Power: Your borrowing power is the maximum loan amount the bank is willing to lend you based on your financial situation. This usually includes looking at your income, expenses, debts, and credit history.
• Your First Step: Figuring out your borrowing power is a great first step to understanding your budget. This will help you know how much the bank is likely to lend you, so you can start searching for a home that fits your price range.

Tips to Boost Your Borrowing Power

• Income Matters: Your income plays a big role in how much you can borrow. If you expect a raise or an increase in income, this could give you more borrowing power.
• Reduce Other Debts: Lowering or paying off things like credit cards, personal loans, car loans, or HECS/HELP can increase how much you can borrow. For example, a $10,000 credit card limit could reduce your borrowing power by as much as $50,000!
• Talk to a Mortgage Broker: Different banks have different borrowing limits based on your financial profile. A mortgage broker can help you explore a variety of options to find the one that works best for you—not just the bank you're already with.

How Much do I need to save (Deposit requirements)

Most lenders generally prefer buyers to have funds to cover at least a 20% deposit of the purchase price, plus additional costs like conveyancing, stamp duty, and government fees.

For Example; a $500,000 property would equate to a $100,000 deposit (20% of $500,000).

Low Deposit Options: If you’re unable to save a 20% deposit, don’t worry—there are several options available that can help with as little as a 2.2%, 5% or no deposit if you have a guarantor. You could explore the First Home Loan Deposit Scheme, guarantor loans, professional packages, OwnHome, or even consider taking out Lender’s Mortgage Insurance (LMI).

Government Initiatives

First Home Guarantee Scheme (FHGS):

The First Home Guarantee is an Australian Government initiative designed to help eligible buyers purchase a home sooner. This scheme allows first-home buyers to secure a property with a deposit as low as 5%.

Each year, around 35,000 places are available under the First Home Guarantee, offered through a panel of participating lenders. To find out if you’re eligible, check the requirements and feel free to reach out to us for guidance: First Home Guarantee

Stamp Duty Waiver and Concessions:

Stamp duty is a fee paid to your state revenue office when purchasing a property. Depending on your property's purchase price and certain eligibility conditions, you may qualify for a discount or waiver of this cost.

• NSW: First Home Buyer Assistance Scheme
• QLD: Transfer Duty Concessions and Exemptions
• ACT: Home Buyer Concession Scheme
• VIC: First Home Owner Grant
• WA: Land Tax Exemption
• gSA: First Home Buyer Information
• TAS: First Home Buyer Duty Relief

First Home Owners Grant (FHOG):

If you are buying or building a new home, or substantially renovating an existing one, you may be eligible for government cash grants. Check your state’s policy on eligibility for more information.

First Home Super Saver Scheme (FHSS)

The First Home Super Saver scheme allows you to make voluntary contributions to your superannuation fund to help save for your first home. You may be able to withdraw these contributions to use towards purchasing your property.

For more details: First Home Super Saver Scheme

For more details: First Home Super Saver Scheme

A Family security guarantee allows an immediate family member to act as a guarantor for the loan. The Loan guarantor secures a portion of the loan using equity within their property, which can help with lower deposits. The portion that the guarantor can cover the 20% deposit + any potential purchase and registration costs.

In the above example, the borrower has purchased a property for $300,000. They have applied for a loan of $240,000 (80% of the $300,00 Purchase price). They have used a family guarantor loan in which their parents have secured their property to cover a loan of $60,000. The borrower covers the repayment on the full $300,000 loan. The clients are covering the borrower will be covering the full repayments over the $300,00 loan.

Searching for your Perfect Home

Once you have a clear understanding of your budget and eligibility, it’s time to start your property search. Our clients typically follow these steps:

• Define the type of property you’re looking for, including the location and budget, Start with your search on popular websites like realestate.com.au or domain.com.au
• Research various neighbourhoods to find one that aligns with your needs and future plans.
• Visit properties and attend inspections to get a sense of market prices, competitor buyers, and the overall feel of the properties.
• Consider your long-term goals for the property. Will you live there long-term, renovate, resell, or rent it out? Your needs extend beyond the present.
• Trust your instincts while staying within your budget. While practical factors are essential, don’t ignore your intuition. If a property feels right and meets your criteria, it might be the one.

Does the Bank/Lender I choose to go with matter?

Selecting the right bank or lender is a crucial step since each offers different products, interest rates, and borrowing power, which can vary significantly based on your personal circumstances and deposit.

Here are the top reasons why your choice of lender matters:

• Borrowing power can vary significantly between lenders.
• Interest rates and fees differ greatly across various institutions.
• You may miss out on product features and services that better suit your needs.
• Certain government schemes are only available through specific lenders.
• Turnaround times can differ, depending on the lender and your requirements.
• Take the stress out of the process by speaking to us. We will help you review your options, streamline your decision-making, and optimise the best solutions for your situation.

What is an Offset Account?

An offset account is a type of bank account linked to a home loan (mortgage) that can help reduce the interest you pay on your loan. Here’s how it works: Instead of earning interest on the money in the offset account, the balance is “offset” against your mortgage. In essence, the amount of money in the offset account is subtracted from your outstanding loan balance when the bank calculates the interest on your loan.

For example:

If you have a $300,000 mortgage and $20,000 in your offset account, you will only pay interest on $280,000 ($300,000 - $20,000). The more money you keep in your offset account, the less interest you pay on your mortgage, which can help you save money and pay off your loan faster. This feature is commonly offered on variable-rate home loans and can be a flexible way to reduce your overall mortgage costs without needing to make extra repayments directly into the loan itself.

Support in your Journey: The Home Buying Process

The information above provides general guidance for your property journey.

Buying your first home may seem overwhelming, but it doesn’t have to be. With our expertise, we’ve helped thousands of Australians purchase their properties. We’ll be by your side, guiding you through every step to make the process as smooth and straightforward as possible.

Let’s connect today to help you understand your budget and develop a plan for buying your first home.