Tips for first home buyers in Australia

Top Tips for First Home Buyers in Australia

How to buy your first home the right way

Buying your first property can be an overwhelming process. First time borrowers can face uncertainty over how to apply for a home loan, how to get approved, the grants they might be eligible for and where they should look to buy. On top of that, the home buying process can be filled with steps you never knew existed and jargon you've never hear before.

This guide will ensure you're more confident when buying your first property, and ready to take on that real estate agent.

Eight tips for first home buyers

Boost your confidence and your home loan know-how with the following eight tips:

  • 1. Consider a mortgage broker. A mortgage broker is there to help you find the right home loan for your situation. Since this is your first home loan, a mortage broker can show you the ropes and explain all the features available.
  • 2. Plan your budget. There is nothing more important when contemplating buying your first home than planning a workable budget and sticking to it, as well as continuing with a revised edition once you have successfully pocketed the keys. It will be through sticking to a budget that you'll get a clear picture of the home loan you can afford.
  • 3. Know your limitations. Whatever you do, do not buy what you can't afford. It's easy to convince yourself that you'll only have to struggle for a couple of years and that everything will be alright once that big promotion comes along. What if something were to happen in the meantime, or the promotion never came? You could stand to lose everything, and you will not have the benefit of the First Home Owner Grant or any other first home buyer incentives the second time around.
  • 4. Save the biggest deposit that you can put together. Saving a deposit will help you in two ways. First, it will show your potential lender that you can exercise financial discipline over a period of time. Secondly, the bigger the deposit the larger the equity you have in your property right from the start. This means you will pay less interest. One of the best ways to save your deposit may be to take out a high interest savings account.
  • 5. Apply for the First Home Owner Grant early. The most appropriate time to apply for the First Home Owner Grant is at the same time you apply for your home loan. You can lodge your grant application through most lenders, if they are an authorised agent and able to receive it. If you do this it will be processed faster than if you send it directly to your relevant State or Territory Revenue Office, the government authority that administers it. In most cases the grant will be processed by the time of settlement or, if you are building, by the time your lender will be paying over the first scheduled construction loan payment. If you miss out, you will still have 12 months from settlement, or from the completion of the building, to apply. Even then, in special circumstances, the commissioner can further extend this time limit.
  • 6. Rid yourself of excess debt. Do not make the mistake of applying for your first home loan while you are carrying excessive debt. Do away with any credit cards you don't really need, finish off your car payments and pay down any personal loans. Make your home loan your top priority.
  • 7. Be a cynical buyer. Do not necessarily believe all you are told. Make sure you carry out thorough building and pest inspections and find out what prices similar houses are selling for in the same locality. If you do your research properly you should be pretty right. You might also want to consider the services of a professional buyer's agent.
  • 8. Make certain you receive all that you are eligible to receive. The various state and territory governments also offer their own incentives to first home buyers in the way of grants. Most states also give generous concessions off the costs of stamp duty imposts. Make sure you know what is available in the locality you are buying your first home.

Episode 19 of the Money Podcast spoke to Taj Singh from First Home Buyers Australia about first home buyer tips

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Things for first home buyers to consider

As a first home buyer in Australia, there are a range of considerations. These include:

If you want the ease of moving into a home which is already landscaped and liveable then you may consider buying an established home. Buying a home which has already been built has the advantage of being in an established area with established streets, footpaths, nearby parks and, importantly, shops and transport.

Need to know how much a house will cost?

You may like the location of a property but not want to, or not be able to build a new home. In this case you might be interested in buying an older established property and then carrying out some improvements, whether cosmetic or structural, or a combination of both. This way you can get the benefits of a new home with the location and amenities of an established home.

Home renovation guide

If you would prefer to put your own stamp on your home from the beginning then you might want to build your first home from the ground up. Choosing the block and the neighbourhood, the street and the orientation, choosing the plan and the builder, then choosing everything from the doorknobs to the paint colours, the pavers to the curtains and everything in between. If you are building your own home, you will need to apply for a construction loan to draw down on funds.

Construction loans guide

The benefits of buying an established home may appeal to you until you go down that path and see just how many homes really do need a new kitchen or a bigger bedroom. However, as you start to look into building your own home, the horror stories of 'lazy builders' ring in your ears and you may think it is easier to buy a house you can move into right away instead of nine months down the track. It is easy to see-saw back and forth between the pros and cons of both buying and building, and you are not alone in your confusion. At the end of the day you need to be happy with your choice now and into the future, so take all the time you need to decide.

Do you know how much it will cost you?

Whether you have been planning to allocate your savings to a first home deposit for years, or have simply been making regular contributions and have now decided your savings balance would make a healthy home loan deposit, if you have an established savings routine and a strong savings balance you are well on your way to being in one of the best positions a first home buyer can be in Australia. You now have the luxury of choice, because you can choose from a range of loans and you can take your time in finding the right loan and the right home.

Need help working how much deposit you'll need?

Very few Australians really fathom the size of the deposit required to get them into the first home of their dreams. You may have underestimated the amount of deposit you need because rising interest rates and rising house prices have gotten away from you. However, just because you don't have tens of thousands of dollars in the bank doesn't mean you can't buy your first home. You may just need to shop around for a loan which requires a smaller deposit, and readjust your ideas about what your first home will look like. Be willing to start much smaller, or put in the work to renovate.

As you can see, first home buyers in Australia come in an endless range of shapes and sizes. You might think that your first home buyer needs are unique, unaffordable or unmanageable, but that's probably not the case at all. All you need to do is view the home loan comparison tables here and you will start to get an idea of the range of unique home loans available to first home buyers. You can then follow a secure link to enquire about your chosen loan or to apply today if you've already made the decision.

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Comparison of Home Loans

Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.69% 4.86% $0 $395 p.a. 90% Go to site More info
UBank UHomeLoan Variable Rate - Standard Variable Rate Value Offer (Owner Occupier P&I)
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.85% 3.86% $0 $0 p.a. 90% Go to site More info
ING DIRECT Orange Advantage Loan - $150,000+ (LVR <=80% Owner Occupier, P&I)
A fully featured home loan with an offset account and discounts available. $1000 cashback offer available for loans over $300k. Terms and conditions apply.
3.79% 4.11% $0 $299 p.a. 80% Go to site More info
CUA Fresh Start Basic Variable Home Loan - Owner Occupier
A basic home loan with flexible repayment options.
3.99% 4.00% $0 $0 p.a. 90% Go to site More info
3.69% 3.72% $0 $0 p.a. 80% Go to site More info
Mortgage House Advantage Home Loan 80 - Special Owner Occupier ($500K+)
A low interest rate home loan that lets you borrow up to 80% of the property's value.
3.73% 3.88% $0 $10 monthly ($120 p.a.) 80% Go to site More info
State Custodians Low Rate LOC - LVR 80% to 90% (Owner Occupier)
Borrow up to 90% of property's value and pay no application fee.
3.79% 3.82% $0 $0 p.a. 90% Go to site More info
ClickLoans The Online Home Loan - Owner Occupier ≤ 80% LVR, P&I
Enjoy a competitive variable interest rate, no application fee, limited annual fees and an offset account with redraws.
3.69% 3.69% $0 $0 p.a. 80% Go to site More info
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier, P&I)
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.84% 4.22% $0 $395 p.a. 95% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.59% 4.48% $0 $375 p.a. 85% Go to site More info
ME Flexible Home Loan Fixed - 3 Year Fixed Rate (Owner Occupier, P&I)
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
4.19% 4.82% $0 $0 p.a. 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Standard Rate, P&I)
Enjoy a low interest rate and borrow up to 95% (with LMI) of your property's value.
4.54% 4.99% $0 $0 p.a. 95% Go to site More info
NAB Base Variable Rate Home Loan - Owner Occupier (P&I)
A competitive no frills home loan. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.17% 4.21% $600 $0 p.a. 95% Go to site More info
IMB Budget Home Loan - LVR <=90% (Owner Occupier)
Get a competitive rate without features you may not use.
3.97% 4.02% $445 $0 p.a. 90% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Standard Rate, P&I)
Investors can take advantage of a short term fixed rate with no application or ongoing fees.
4.54% 5.04% $0 $0 p.a. 95% Go to site More info
Bank Of Queensland Economy Home Loan - Variable (Owner Occupier)
Take advantage of a basic no-frills home loan with extra repayments and fee free redraw.
3.89% 4.04% $300 $10 monthly ($120 p.a.) 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 3 Years Fixed (Standard Rate, P&I)
Split your loan for free with one of the lowest fixed home loan rates.
4.59% 4.97% $0 $0 p.a. 95% Go to site More info
IMB Essential Home Loan - LVR <=90% (Owner Occupier)
Get access to a redraw facility and offset account without the annual fee.
4.19% 4.19% $0 $0 p.a. 90% Go to site More info
NAB Choice Package Variable Rate - $250k to $749,999 P&I (Owner Occupier)
Package your home loan to get discounts on your interest rate and other financial products.
4.39% 4.78% $0 $395 p.a. 95% Go to site More info
St.George Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.80% 3.81% $0 $0 p.a. 95% Enquire now More info
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Auction advice from The Block 2016 winning auctioneer Damien Cooley

Damien: I think the best advice that I can give a first time buyer, I mean, obviously, they need to do their homework and whether that fits for them, the property is right for them. And I say to them, "Well, are you investing or are you buying where you wanna live?"

If you're buying where you wanna live, just go and buy in the area that you wanna live in. If you're investing, you need to be a little bit more strategic about where you buy to try and get the best yield rental return that you can for that property.

Affordability also comes into play. If you've got half a million dollars to spend, well, you know that you can't go and buy a three-bedroom house in Rose Bay. So, you're gonna be saying this off, "Well, where can I afford to buy? Let's look at where I can afford to buy then. Let's find what sort of property. Is it a one-bedroom unit, a two-bedroom unit, or a three-bedroom unit can I afford to buy?"

When that first time buyer then goes to auction, the best advice that I can give them is to take some along to the action with you, take someone who's got the experience. You can employ a buyer's advocate or a buyer's agent in any area throughout Sydney, Melbourne, or any state or territory in Australia and you can actually just employ them.

If you prefer to, if you can afford the full service to get them to find a property for you and search, you can employ them and even a real estate agent to go and bid at auction for you. Having a professional bidder represent you at an action can save you tens, if not hundreds of thousands of dollars.

My role is to get as much as I possibly can out of the buyer and I make no apology for that. That's what I'm being remunerated to do and that's why I think it's always good to get somebody to represent you, to bid for you at auction because their role is to buy it cheaply as they possibly can. They remove emotion. They bid at thousands of auctions and they understand how auctions work and I understand what I'm thinking and how I'm trying to get the most out of them.

So if I was a first time buyer, I'd really be investing in getting someone to represent me at auction. And if I couldn't afford somebody like that, I'd have my mom, my dad, or somebody who's been to auction before, that been around the traps and know what they're doing.

Considerations when searching for your first home

There are a number of factors to consider when deciding where to search for a home, and not all of them have to do with the price:

  • Transport. The quality of public transport can be a major factor in making your decision to buy in a certain area. The cost of running your car long distances each day could well infringe on your ability to keep up with home loan repayments, particularly during times of interest rate increases.
  • Shops. Living in close proximity to a shopping centre can make a major difference in the convenience of your day-to-day activities.
  • Schools. As your children grow and move from kindergarten into primary school and then from high school into university you will need to be reasonably close to such facilities.
  • Work. We all have to go to work, and if you can't live nearby your workplace you should ascertain that the available transport system will get you there.
  • Future expansion. As your family grows your first house may well prove to be too small for the changing circumstances, so look into the future and satisfy yourself that you can expand if need be.

Buying your home is a big step and it is important to make sure that you arm yourself with as much knowledge as you can.

The Boomer Supremacy

Richard Cooke’s The Boomer Supremacy explores how Gen Y's have been locked out of the property market. Read a summary of the article here.

Image: Shutterstock

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at Talk to him to find out more about home loans.

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Related Posts

Bank of Queensland Fixed Rate Home Loan - 3 Year Fixed Rate Discount Rate $150k+ <80% LVR (Owner Occupier, P&I)

This fixed rate loan includes a special offer for new lending of $150000 with an LVR of 80% or less. Offer extended.

NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I)

A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)

Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.

IMB Budget Home Loan - LVR <=90% (Owner Occupier)

Get a competitive rate without features you may not use.

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6 Responses

  1. Default Gravatar
    PeachMay 29, 2014

    the First Home Savings Account here is ancient, not updated since 2010. All the dollar limits have since been changed AND the whole scheme has subsequently been scrapped.

    • Staff
      ShirleyMay 29, 2014Staff

      Hi Peach,

      Thank you for your feedback, we’ve now updated the page so it’s relevant for our users.


  2. Default Gravatar
    JimMay 19, 2014

    Dear sir/madam

    I am buying an established property from a seller
    for $216,000 in fifteen months time to be paid in
    cash from my own savings. The seller is still paying for the mortgage. Could you please tell me
    how and to whom and in what manner should this money be paid?
    Should the payment be made before or after the documentation has been completed?

    Could you please give me an estimate of all other cost including the GST.

    • Staff
      ElizabethMay 20, 2014Staff

      Hi Jim,

      Thanks for your question.

      Usually, payment is made when the seller and the buyer exchange signed copies of the contract of sale. If you are using a solicitor to draw up the documents then they may be able to advise you how the money should be paid, as the payment terms may be specified in the contract.

      As for GST, the ATO has a GST Property Tool that can calculate the GST that will be payable in the sale.

      I hope this has helped.



  3. Default Gravatar
    phillipFebruary 2, 2014

    is the first home owner grant only for new homes

    • Staff
      ShirleyFebruary 3, 2014Staff

      Hi Philip,

      Thanks for your comment.

      Yes the FHOG is only for new homes.


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