All Your First Home Buyer Questions Answered

From property search to home loan application and on to settlement day, we've answered your questions

Want to buy a home but don't know where to start? We understand how you feel. Buying your first home seems so scary and complicated. But once you break it down piece by piece it isn't that hard. This article will guide you through the home buying process from start to finish in clear, easy to understand language.

How big should my deposit be?

Saving a deposit is really the first big step in the home-buying process, but how much do you need to save?

The classic answer is 20% of the property's value. In home loan jargon this translates to 80% loan-to-value ratio (LVR). In other words, you save a 20% deposit and borrow 80% to buy a property.

  • Property value = $1 million
  • 20% deposit = $200,000
  • Borrowing = $800,000

The majority of Australian home loans are 80% LVR, meaning you need to save that big 20% deposit. However, it's still easily possible to get a loan with only 5% or 10% deposits.

These low-deposit home loans have maximum LVRs of 90% or even 95%. They are often targeted at first home buyers. It can be a good idea to consider one of these loans: 5% of $1 million is only $50,000, which is a much smaller deposit than $200,000.

Nevertheless, there's a catch.

If you borrow more than 80% of a property's value (a 10% deposit, for example) you need to pay lenders mortgage insurance (LMI). This can add a lot more to your home loan costs.

LMI costs explained

LMI can cost anything from a few thousand dollars to tens of thousands of dollars. It depends on how much you're borrowing and how big (or small) your deposit is. Here are some estimated costs taken from Genworth's LMI estimator:

  • Property value = $600,000
  • Loan amount = $540,000
  • Loan-to-value ratio = 90%
  • LMI = $13,176 (estimate)
  • Property value = $1,000,000
  • Loan amount = $950,000
  • Loan-to-value ratio = 95%
  • LMI = $42,845 (estimate)

You can pay your LMI up-front, but you can also capitalise the cost into your loan. This means you borrow the LMI costs alongside the money needed to buy the property.

Can I avoid LMI?

The easiest way to avoid LMI is to save a bigger deposit. It’s understandable that this isn't always possible.

Another option is to find a guarantor, such as a parent or other family member. If your guarantor has a property of their own, they can use it as security for the remaining 15% of the deposit. You just need a 5% deposit of your own savings but you won't have to pay lenders mortgage insurance.

If you're in a rush to buy a property and can afford the extra costs, it can be worth paying LMI. The important thing is to be aware of this extra cost and crunch the numbers for yourself.

Close up view of street map.

How do I find a property?

To figure out what type of property you want to buy (and where), make a checklist of factors that matter most to you. Some of the key factors are:

  • Budget. Use a borrowing power calculator to work out how much you can borrow. Start looking at suburbs that fit your budget. This also gives you an idea of which suburbs and types of properties you can afford.
  • Family plans. If you have three kids you already know how many bedrooms you need. If you have none but are planning to have one kid or more, be sure to factor that in.
  • Travel times. Do you mind a long commute or do you want to walk to work? This is a very important consideration. Living closer to work can be expensive if your office is in a busy CBD area. But time is money too. Is it worth saving money on a home further out but losing two hours or more to your commute every day?
  • Lifestyle. Do you value closeness to green space and large supermarkets? Or do you care more about nightlife and trendy bars? The kind of life you live (or want to live) heavily affects your property search.
  • Schools. If you have kids or are planning to, being close to good schools is an important factor to consider.
  • Property type. Apartments are a terrible idea for some buyers and a brilliant choice for others. It's the same with houses. Work out what you actually need and balance it against what you can afford. But remember that the inner-city apartment versus big house in the suburbs split doesn't represent the entire market. It can be possible to meet in the middle. For example, a townhouse 30 minutes from the CBD might be the perfect compromise in lifestyle and price.

You can simply list out these factors and work out what matters most to you. Or you could score each factor on a scale of one to five. This will give you a clearer idea of what really matters to you.

Use the right tools to help you search

The property market represents an overwhelming set of choices for many first home buyers. Thankfully there are many online tools to help you narrow down your search.

  • Real estate listings. The big property sites in Australia are realestate.com.au and Domain. Both list properties and let you filter your search in various ways. They also have profiles on individual suburbs.
  • Calculators. Finder.com.au has a very useful set of home loan calculators to help you research your borrowing power and how much your loan repayments will cost you.
  • Local agents. Visit the websites (or offices) of local real estate agents and check out their listings. This is a good step to take if you have some idea of the suburbs you're looking to buy in.
  • Buyers agents. A professional buyers agent can find properties for you, doing the legwork on your behalf and presenting you with a carefully considered range of properties. They can even help you with the bidding process. A buyers agent will cost you some money, but they can be a hugely useful resource, especially when buying inter-state.
  • Hit the pavement. Ultimately the best research is hitting the pavement and checking out suburbs for yourself. Walk the streets, try the local cafes and go on property inspections to get a feel for homes in the area.

How much can I borrow?

There are a number of factors that influence the amount that a bank will lend you, and a number of things that you can do to increase your borrowing power.

One of the biggest questions that first home buyers ask is exactly how much they can borrow. It makes sense, as this will dictate your buying power and influence the type of property you can buy.

Lenders look at a number of factors to determine how big a home loan they believe you can service. You can get a good idea of how much you can borrow by using the calculator below.

To better understand why you may have received a certain result from the calculator, read on to find out what lenders take into account when assessing your borrowing power.

What is your income?

One of the biggest factors determining your borrowing power is your income. But lenders don't treat all income equally.

  • PAYG employees. If you're a PAYG employee, assessing your income is relatively straightforward. Lenders will usually want to see at least three payslips to get a good idea of your base wage after tax. This will be used to calculate your disposable income.
  • Self-employed. If you're not a PAYG employee, assessing your income becomes a bit more difficult. If you're self-employed and run your own business, you'll likely be asked to provide 12 months of Business Activity Statements (BAS) and your registered business name and Australian Business Number (ABN).
  • Contract workers. If you're a contract or seasonal worker, you'll likely need to provide your most recent Notice of Assessment from the Australian Taxation Office (ATO).

Some lenders will approach self-employed and contractor income a bit more cautiously, and if your income has varied from year to year, they may only be willing to accept the lower number.

Income from other sources can also be included, but once again, lenders may not accept the full amount of some income sources. Income from bonuses and commissions is accepted by most lenders. You'll likely have to provide two years' worth of documentation for bonus or commission income.

If you own an investment property, lenders will also accept your rental income. However, many lenders will only accept up to 80% of your rental income to account for untenanted periods.

How big is your deposit?

The size of your deposit will be a huge factor in determining your borrowing capacity. You'll need at least a 5% deposit to qualify for a home loan, which means your deposit will need to equal 5% of the purchase price of the property you're buying.

If you have less than a 20% deposit, you'll have to pay for lenders mortgage insurance (LMI). This is a policy that covers your lender in the event that you default on your home loan. LMI can run into the tens of thousands of dollars, and will factor into the size of your loan. A bigger LMI charge means a larger loan size, which can diminish your borrowing capacity.

When you're saving your deposit, you'll also have to factor in some of the government and legal fees associated with home loans. You'll likely have to pay a variety of fees for soliciting and conveyancing, council rates, mortgage registration, title transfer and stamp duty. These charges will come out of your deposit and will affect your borrowing capacity.

Learn more: complete guide to saving a deposit

You can use the calculator below to determine the amount of stamp duty you'll likely have to pay. Remember to factor this in when calculating the size of your deposit.

What are your assets?

Lenders will also look at any assets you have. These can include vehicles, other properties and even your superannuation.

What are your expenses?

Lenders will examine your expenses to determine your disposable income. This doesn't mean that the lender will scrutinise your actual spending. In general, lenders use formulas to estimate your living expenses.

The most common method that lenders use is the HEM or Household Expenditure Method. This method looks at 600 items from the Australian Bureau of Statistics' (ABS) Household Expenditure Survey. It then calculates the median spend on absolute basics (food, utilities, transport, communications, kids’ clothing) and the 25th percentile spend on discretionary basics, which includes expenses like alcohol, eating out and childcare.

The less common method some lenders use is the Henderson Poverty Index. This method calculates expenses based on a family of two adults and two children and can be adjusted to take into account other family sizes.

Once lenders have estimated your expenses, they can begin to get an idea of how much disposable income you have to devote to home loan repayments. But there are still a couple more factors that will be taken into account.

Learn more: how lenders calculate living expenses

How much debt do you carry?

Lenders will pay close attention to the amount of existing debt that you have. This can include personal loans, car loans, student HECS and HELP debts, store cards and credit cards. They'll look at your regular debt repayments to determine whether you're in a position to take on more debt in the form of a home loan.

It's important to remember that when lenders assess your credit card debt, they'll look at the available balance rather than the actual debt you're carrying. For instance, if you have a credit card with a $10,000 limit but you only have a $2,500 balance, lenders will use the $10,000 limit in their calculations rather than your actual balance.

How big an interest rate can you handle?

Finally, lenders will take into account potential interest rate rises in the future. While home loan rates might be low at the moment, lenders want to know that you'll still be able to make your repayments should rates rise in the future.

Generally, lenders build in a significant interest rate buffer when determining your borrowing power. Most lenders will add a 2-3% interest rate buffer, but some will even determine your ability to repay your home loan by assuming double the current interest rate.

What can you do to increase your borrowing power?

If you've looked at all the factors influencing your borrowing power and are worried you won't be able to borrow as much as you'd hoped, there are a few things that you can do to put yourself in a better position.

First, if you've been in your job for some time, it could be time to ask for a raise. A boost to your income will mean a boost to your borrowing power.

Second, think about taking time to save a larger deposit. This can have a huge impact on your borrowing capacity.

Finally, look into cutting your level of existing debt. If you have a number of credit cards, think about consolidating them into a single card via a 0% interest balance transfer. Once you've consolidated your cards, reduce the limit as much as possible. You should also spend time paying down any loans to reduce your total level of debt.

Taking a few steps before you apply for your home loan can make a big difference to your borrowing power.

Infographic showing the documents needed for a mortgage.

What information do I need for a home loan?

When you apply for a home loan, having your documents in order will speed you through the process.

Home loan applications require a variety of documents to demonstrate to your lender that all the information on your application is factual and correct. Getting these documents in order before you apply can shave days off the approval process.

Identification documents

First, you'll need to prove to your lender who you are. This prevents mortgage fraud and proves your basic eligibility for a home loan. You'll need to provide 100 points of identification. This means providing what are known as primary documents, which count as 70 points of identification, and secondary documents which range between 25 and 40 points.

Primary documents

  • Passport (current within last two years)
  • Birth certificate
  • Citizenship certificates
  • Diplomatic documents
  • Name change certificate

Secondary documents

  • Driver's licence or photo ID card (40 points)
  • Mortgage documents or council rates notice (35 points)
  • Foreign driver's licence, utility bill with name and current address, medicare card or credit card with name (25 points)

Financial documents

Your lender will also need information about your financial position.You'll need proof of your employment, and documents to demonstrate the amount of income you generate. And you'll need to provide proof of any assets you hold.

In addition to your income and assets, you'll also need to provide documentation for your liabilities. Your liabilities are any ongoing debt repayments. These payments could be for expenses such as personal loans, car loans, credit cards or store cards.

Income documents

  • Most recent payslip
  • Three months of bank statements
  • Employment contract and letter from employer stating base wage
  • Tax return prepared by tax agent
  • ATO notice of assessment (self-employed and casual workers)
  • Business Activity Statement (self-employed)
  • Accountant's letter (self-employed)

Asset documents

  • Superannuation statement
  • Term deposit or savings account statement
  • Vehicle registration

Liability documents

  • Credit card statements
  • Personal or car loan statements
  • Store card statements

Getting your documents together

Before you apply, make sure you compile all your identification and financial documents, and put them in an easy order. You won't want to provide original identification documents, so take time before you apply to get certified copies of any documents you'll be using to prove your identity.

You may want to get some miscellaneous documents together as well. These could include your First Home Owner Grant (FHOG) application. If you've already found a property, you may want to include a valuation if one has been done, a copy of your building insurance policy and a signed copy of the contract of sale.

Learn more: all the documents needed for a home loan application

Should I use a mortgage broker?

It's possible to get a home loan entirely on your own, but there are professional experts called mortgage brokers who can help you navigate the complex mortgage industry.

A professional mortgage broker.A good broker can help you compare your options and find a mortgage that suits your needs and has a competitive interest rate.

Finding a home loan through a broker can be a great idea, especially for first-time buyers. However, there are several reasons why you might be better off finding a loan for yourself.

We've broken it down for you.

Why should I consider a broker?

There are thousands of mortgage products out there. It's a complex, competitive industry with a lot of money to make (and borrow). So why not have a licensed professional navigate the whole thing for you?

Brokers:

  • Help you access loans from multiple lenders.
  • Can advise you on options you never knew you had (like specialised loan types).
  • Are free to use (the broker receives a commission from the lender they connect you with).
  • Do the hard work for you and save you a lot of time.
  • Can negotiate on your behalf and help you with the whole application process.

Mortgage brokers are especially useful for borrowers in unique or difficult circumstances. If you have a low deposit, bad credit history or are self-employed, many lenders make it harder for you to get a loan. Some won't deal with you at all.

Brokers can assess your situation and help you find the right loan and lender because they're incentivised to help you.

Speak to a mortgage broker today

What are the downsides of going with a mortgage broker?

You don't need a mortgage broker. They're helpful, but they're not necessary. You can do your own research, find a loan you like and approach a lender directly.

Here are some reasons you might not bother with a broker:

  • Finding a broker can be a tough process itself. There are a lot of mortgage brokers operating these days. That's a lot of services to compare, and not all brokers are equally effective. It can be hard to tell a good broker from a substandard one.
  • Nothing beats your own research. You should know your own needs and finances better than anyone. Taking the time to learn how home loans work and find the right one for you is a wise idea. And while a broker can help you get a home loan, you'll be the one paying it off for potentially 30 years. It pays to know what you're signing up for.
  • DIY, do it right. Brokers are there to help you, but without comparing and researching yourself it can be hard to know if you're getting a good deal or not. This isn't to say that brokers are untrustworthy (most are qualified, reliable professionals), but a home is probably the biggest purchase you'll ever make. While the right help is valuable the wrong help can be detrimental.
  • Lenders can help you too. A lender wants your business as much as a broker does, and a good lender will have staff who can advise you on the home loan process. Just keep in mind that you only have access to loans from that particular lender (but you can also try to negotiate a lower rate on your own).

How do I win at auction?

Auctions are intimidating, but arming yourself with some knowledge can help you emerge victorious at the final hammer.

As a first home buyer, there are few experiences more nerve-wracking than attending your very first auction.

Visit auctions first

The best way to demystify the auction process is to visit a few before you're actually ready to bid. Don't be afraid to be an auction spectator. Attend some auctions for properties you have no intention of buying to get a feel for the way the process flows, the way people bid and the end result.

If you have a property in mind, it could be useful to visit auctions of comparable properties. This could help you develop a rough idea of the price expectations for the property you've set your sights on.

There's another fringe benefit of attending a number of auctions. There are a limited number of auctioneers, and by attending a few auctions you can get to know different auctioneers and their styles. Get a feel for how they keep auctions moving, the psychology they use to draw out bids and how quick they are to call a winning bid.

The auction process can be intimidating if you don't know what to expect. However, if you take the time to attend a few you can put many of your fears to rest.

Get pre-approval

Getting home loan pre-approval before you head to auction is crucial. It puts you in a better bargaining position, and gives you peace of mind.

Pre-approval is an early stage of the home loan process wherein a lender agrees in principle to lend you a certain amount. This happens after your initial application, usually within 24-48 hours. A lender will examine your income, expenses and liabilities along with the size of your deposit, and will determine the amount they would be willing to lend you subject to verifying your details and the details of the property you're buying.

It's important to remember that pre-approval is not a binding agreement for a lender to extend you a certain amount of credit. However, it does give you a good idea of the budget you'll be working with. This is important when you head to auction. With pre-approval, you can attend auction with more confidence in your buying power.

Pre-approval also shows a vendor that you're a serious buyer. If you win at auction, you'll need to be ready to move quickly, and pre-approval puts you a step ahead of the process.

Should none of the bids meet the vendor's price expectations, the property could be passed in at auction. This means the vendor would enter private negotiations with the high bidder. Having pre-approval can give you an edge in these negotiations, particularly if the vendor is looking for a quick settlement.

Be confident

Call out your bids with confidence, loud and clear, and don't be afraid to respond to other bids quickly. Showing other bidders that you're willing to immediately respond to any of their bids can demonstrate that you're serious about the property and put other bidders off.

Go slow

While confidence is vital, you should avoid getting too carried away. Start your bidding low and go up by increments as small as the auctioneer will allow. Going too fast too early will only serve to drive the price skyward.

If bidding stalls, wait for the auctioneer to begin accepting smaller incremental rises in price. You'll show the auctioneer that you're a disciplined, serious bidder which could save you thousands.

Stick to your limit

The most important strategy to remember at auction is to stick to your budget. Pre-approval is a great way to know your price range, but you should also do your own budgeting to determine the repayment size you can comfortably handle.

Once you've figured out your budget, you'll need to be extremely disciplined at auction and avoid outbidding your own budget. Buying a property is a highly emotional process, and it can be easy to be swept up in the excitement of an auction.

However, going over your limit by even a few thousand dollars can cause serious problems when it comes to settlement. Moreover, even if you do get approved for a larger home loan, outbidding your budget can put you in serious stress when it comes time to make your repayments.

Line of Australian apartments.

Should I buy a house or a unit?

The question whether to buy a house or a unit comes down to both your preferences and your property goals.

Before you can begin your property search in earnest, you'll need to decide the type of property you're in the market for. You'll need to choose whether to focus on houses or units. The decision between the two will likely come down to a number of factors.

Affordability

Affordability is a major concern when deciding to purchase a house or unit. Depending on the area where you're buying, the difference in price between houses and units can be substantial.

According to CoreLogic figures from March 2018, the median capital city house price was $694,478, while the median unit price was $578,244. That's a difference of more than $116,000.

The gap becomes even more prominent in capital cities such as Sydney and Melbourne. The median house price in Sydney in March was $1,041,791 while the median unit price was $760,814. The median price for a house in Melbourne was $834,318 while the median unit price was $575,204.

With a massive difference like this, it's easy to see why first home buyers can be drawn to units. The barrier to entry is much lower for the unit market, and a deposit can be much easier to save. If affordability is a major concern, you may want to give units a look.

Capital gain

If you have an eye toward capital gain, houses often outperform units. However, this varies significantly from one capital city to the next.

March CoreLogic figures show combined capital city unit prices actually outperformed houses for the year to March, with 3.6% growth versus 1.5% growth for houses. But the picture differs from one area of the country to the next.

For example, in Brisbane houses significantly outpaced units for the year to March 2018, with 1.8% growth compared to a 0.6% decline for units. The picture is markedly different in Sydney, where houses declined 2% on an annual basis in March while units grew 3%.

If capital growth is your goal, make sure to do your research when deciding between a house or a unit. While the figures above are a good illustration, make sure you look at long-term trends in the area you're buying rather than just the latest capital growth figures.

Privacy

One of the luxuries afforded by many houses is privacy. A house generally gives you an added layer of separation from your neighbours, and this privacy is a two-way street. It’s less likely your neighbours will bother you and you can be less worried about bothering them.

With this privacy sometimes comes the sacrifice of some security. Unit blocks often offer multiple layers of security from unwanted visitors. While you may sacrifice some privacy from living in such close proximity to your neighbours, units can offer added peace of mind in their security.

Maintenance costs

When you take on the responsibility of a house, you take on full financial responsibility for any repairs or maintenance.

By contrast, units spread this cost out amongst all the owners. Strata costs and sinking funds pay for repairs and maintenance on the building, as well as things like landscaping. Strata fees also cover insurance costs, which you would bear yourself if you bought a house.

Flexibility

Houses tend to offer more flexibility than units. With strata comes strata bylaws restricting the use of your unit. These can include restrictions such as not having pets or not hanging washing from your balcony to restrictions on the types of renovations you can undertake.

With a house meanwhile, you're only restricted by council and building regulations. This means you can renovate and add to your house however you like.

Making your choice

Ultimately, deciding between a house or unit comes down to your own financial situation and your property goals. Weigh up some of the points above and decide which fits best with your own goals.

Learn more: apartments versus houses

What inspections should I get done?

Spending a bit of money on inspections can save you thousands in the long run.

It's easy to understand why some people may eschew paying for inspections. When you're saving to buy your first home, the last thing you want is one more expense.

However, a bit of extra expense now could keep you from heartbreak down the road. It's worth paying to have proper inspections carried out before you sign a contract. Identifying problems before you commit to a property is invaluable.

While some vendors choose to pay for inspections themselves, in most cases you'll be out of pocket. So before you spend hundreds on an inspection, make sure it's a property you're truly serious about.

Most inspections require a few days' notice, and your inspector will need to arrange access with the property vendor.

There are a number of inspections you could have conducted. The kind you'll need depends on the property you're buying.

Building inspection

A building inspection examines the condition of the building and site of a house. The inspector will identify any areas of damage or areas that could become a problem in the future.

Some of the areas that will be inspected include:

  • Building and roof exterior
  • Roof space
  • Building interior
  • Underfloor space
  • Site exterior
  • Fencing
  • Stormwater run-off

If there are areas the inspector doesn't examine, they will note this in the report and provide a reason why the areas weren't inspected.

Pest inspection

A pest inspection entails visually inspecting the building for any signs of termite damage or activity. Inspectors will generally examine the interior and exterior of the home, as well as the underfloor space and roof cavity.

Most pest inspections will also identify areas of high risk, such as timber piles close to the property. It may also recommend management strategies to avoid future pest infestations.

Strata inspection

A strata inspection entails inspecting a unit, and examines different criteria than building inspections. Strata inspectors will examine the physical condition of a unit, as well as the strata agreement and attributes of the building.

Strata inspections will look at areas such as:

  • The exterior and interior of the unit
  • Insurance for the building
  • Building reports
  • Voting rights and entitlements
  • Strata fees
  • Major expenditures, actual or proposed
  • Fire and asbestos compliance
  • Whether or not the building is a harmonious environment

A strata inspector will also examine minutes from the owners' corporation annual general meeting and any other relevant meetings.

Pre-settlement inspection

A pre-settlement inspection is an inspection you carry out yourself in the days leading up to your home loan settlement.

During this inspection, you'll want to ensure that there are no issues that would put the seller in breach of contract. If you find a major problem, you have the right to delay settlement until the issue is resolved.

Some of the questions you'll want answered are:

  • Is the home and exterior clean and in good condition?
  • Has the vendor damaged the property between contract and settlement?
  • Are all items included in the contract of sale present?
  • Is the home vacant?
  • Has excess rubbish been left on the property?
  • Are fixtures and fittings functioning?

Learn more: property inspections explained

What happens after my offer is accepted?

You've won at auction or had an offer accepted on a property. Now what?

A young couple admire their new house.If you've emerged victorious in your property hunt, it's a time for celebration. However, your journey is far from over. It will usually be at least six weeks from the time your offer is accepted on a property to the time you actually move in.

There's still a lot to do in this six-week period. Once your offer is accepted, the process will move very quickly. You'll need to prepare yourself to make sure you have everything in order.

Pay your deposit

If you've succeeded at auction, you'll need to pay your deposit immediately. If you buy by private treaty sale, the agent in charge of the sale will let you know when you need to pay your deposit.

You'll generally need to pay at least a 10% deposit. You'll need to speak to the vendor or agent to determine what form of payment is required. Most vendors will require a bank cheque or personal cheque. You can generally get a counter cheque from a bank with the payee's name and amount left blank so you fill out the details on the day.

Some vendors may also accept what's known as a deposit bond. This is a guarantee issued by your lender or a third party for 10% of the purchase price. This can be useful if you have funds tied up in term deposits. However, not all vendors accept deposit bonds.

Sign your contracts

You'll need to sign the contract of purchase straightaway. Until contracts have been signed and exchanged, the vendor is technically under no obligation to sell the property to you and can still accept offers from other buyers.

The best time to sign contracts is when you pay your deposit. This guarantees that the vendor is obligated to sell you the property at the agreed price for the agreed terms.

Find a solicitor or conveyancer

It's crucial to enlist the aid of a solicitor or conveyancer to help you through the settlement process. A solicitor or conveyancer will help with the transfer of title and will thoroughly check the contract of sale. They will prepare all the documents needed for settlement, and will liaise with your lender's solicitor and the vendor's solicitor to ensure a smooth transaction.

If you live in Queensland or the ACT, you'll have to use a solicitor to carry out your conveyancing duties. However, if you live elsewhere you'll need to decide whether you want to use a solicitor or conveyancer.

A conveyancer can easily handle straightforward property transactions. Conveyancers also tend to have lower fees than solicitors. Moreover, conveyancers have expert knowledge of issues affecting the title to your property and can identify and handle any issues that might arise.

Solicitors, meanwhile, are experts in property law. This means if your settlement runs into any issues or if there are problems with the contract of sale, a solicitor can identify and help you work through these. If your property transaction is likely to be more complex, a solicitor may be your best option.

Speak to a conveyancer

Provide final documentation to your lender

Your lender will still need some documentation before giving final approval to your home loan. They'll need the contract of sale, and may want additional documents proving your income, assets or liabilities.

If one hasn't been carried out, they'll also perform a valuation on the property. This determines the final maximum amount the lender will lend you. The highest loan-to-value ratio offered by lenders is 95%, meaning you can borrow a maximum of 95% of the value of the property you're buying. If there's a discrepancy between your purchase price and the lender's valuation, you could be forced to cover the shortfall.

Prepare to move

You'll have a few weeks now to prepare for moving day. This is the time to set up the transfer of all your utilities and services, as well as mail redirection.

You'll also want to book removalists during this period. It's wise, however, to give yourself a day or two after settlement before moving. Issues can arise that can delay settlement, and you don't want to pay your removalists to stand around waiting for you to get access to your new home.

Be ready for settlement

While it's not necessary for you to actually attend settlement, you will need to be prepared for it. This means signing all the documents requested by your solicitor or conveyancer and having enough money in your account to cover settlement costs.

Settlement costs usually include mortgage registration and title transfer fees, soliciting and conveyancing fees, council rates and fees and stamp duty.

Before settlement, your solicitor will present you with the total cost of the transaction, minus the deposit you've already paid. You'll need to come up with the difference between this figure and your home loan amount, and you'll need this amount sitting in your account the day before settlement.

Learn more: what happens on settlement day?

Move in!

After settlement, you'll receive the keys to your home. Usually you'll pick these up from the agent just after settlement. At this point, your home-buying journey is complete. Congratulations! You've purchased your first home.

But your home owning journey is just beginning. In the years ahead, you'll decide how you want to manage your home loan and your property. You should have a look at your home loan interest rate at least every 12 to 18 months to determine if you're still getting a good deal. And if there's a lower rate on market, it could be time to refinance.

You also might find you want to undertake renovations. If so, you'll need to decide how to finance your renovations. You may do this through a home loan top-up or via a line of credit loan.

You may even find you want to leverage the equity in your property to purchase an investment property. If this is the case, you'll need to compare investment home loans.

Regardless of what the future holds, you can be proud that you've accomplished a monumental task. You are officially a homeowner.

Am I eligible for grants and assistance?

While buying your first home is a difficult task, there's good news in the form of government grants and concessions.

Depending on where you live and the type and value of the home you're buying, you could benefit from first home owner grants. These grants can form a significant part of your deposit, with some grants offering more than $20,000.

Many states and territories also offer concessions or exemptions from stamp duty. Stamp duty can add tens of thousands of dollars to the cost of your home. Knowing the concessions and exemptions available can save you money and potentially boost your borrowing power.

Am I eligible for a first home owner grant?

While eligibility requirements will vary from one state to the next, there are some general requirements:

  • You must not be buying a home as a company or trust.
  • At least one applicant must be a permanent resident or Australian citizen.
  • Each applicant must be at least 18 years old.
  • You or your spouse, partner or co-purchaser must not have previously owned an interest in land in Australia which had a residence on it, before 1 July 2000.
  • You or your spouse or partner cannot have lived in a residential property which you owned from 1 July 2000.
  • You or your spouse, partner or co-purchaser may not have claimed the grant previously.
  • You must occupy your first home as your principal place of residence within 12 months of the construction or purchase of your home and the minimum period of occupancy is six continuous months.

You can read our state-by-state guide to first home owners grants or take the quiz below to find out what grants and concessions you might be eligible for.

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Got more questions?

We hope this guide has answered the biggest questions about buying your first home. But the home buying journey is a complex process that differs for everyone. If you've got more specific questions don't worry. Finder has articles on almost everything related to homes and home loans. And if you can't find it on our site just leave a question in the comment section below and one of our experts will get back to you.

Ready to get a loan? Compare options for first home buyers

Rates last updated August 17th, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.64%
3.68%
$0
$0 p.a.
80%
A competitive interest rate for first home buyers that keeps fees low. You will need a 20% deposit and can borrow up to 500000.
3.59%
3.59%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.64%
3.65%
$0
$0 p.a.
80%
Low interest rate and limited fees. Add a 100% offset account for $10 a month.
3.68%
3.82%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.72%
4.10%
$0
$395 p.a.
80%
New borrowers or refinancers from another lender get a discounted rate with this package loan.

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Home Loan Offers

Important Information*
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150k+ Owner Occupier, P&I) Discount 1

New borrowers or refinancers from another lender get a discounted rate with this package loan.

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