The First Home Buyers Guide You Need
When purchasing your first home there are a lot of questions ranging from saving up for a deposit to getting the right loan. As a mortgage broker we are here to help walk you through these steps and answer any questions you have.
Guide Contents
- Introduction
- Saving and preparing for a deposit
- Grants and Government Schemes
- Home Buying Process
- Applying for a home loan
- Buying your Home
Introduction
One of the biggest purchases you’ll make in your life will be your first home and it is important that you acquire helpful information to help you along the way. Buying your first home can be daunting but this guide will help you through the process as well as provide useful tools to help you along the way.
One of the biggest assets you have available is a mortgage broker. A Mortgage broker specialises in acquiring a home loan that suits your needs. Regulated by the Best Interest Duty, they need to look after your best interests when helping you with finance. Some will help you at the point you only need finance, while others such as Read Finance will help you from the very beginning and continue working with you after settlement.
Saving and Preparing for a Deposit
It is a common misconception that you need 20% saved to buy a home, many lenders now accept as low as a 5% deposit as genuine savings. This is not a set rule though, the government scheme called Family Home Guarantee only requires as little as a 2% deposit.
See our Deposit Calculator to get an estimate of the borrowing power and mortgage repayments. You can also take into consideration interest rate changes. This calculator is for illustrative purposes and in itself shows just examples without looking into your specific circumstances. In other words, use it as a guide only and know the true figure could be significantly different.
You may see the term genuine savings show up, genuine saving is a term used by lenders that generally means that you are able to show that you saved that amount without a gift offering or borrowed money. For example, this could be money from your job, business income paid to you, or a constant investment income. You of course can use these in a deposit but the lender may still want a certain amount as genuine savings.
First Home Super Saver Scheme (FHSS) is another way you are able to save for a deposit for your first home. You can make voluntary super contributions to this scheme out up to $15,000 per year for a total of $30,000. The advantage of this scheme outside of saving for your first home deposit is that your contributions are taxed at a lower rate.
There are also fees or extra costs to you which you need to keep in mind that may be applicable when getting a home loan that you need to be aware of:
- Building and Pest Inspection
- Transfer Duty (Call Stamp Duty in states outside of Queensland)
- Land Tax
- Lenders Mortgage Insurance
- Legal Fees
- Moving Costs
- Swimming Pool Inspection
- Utility Connections
- Valuation Fee
Not all of these may be relevant to your situation, talk to your solicitor or conveyancer to get extra information about some of these that your mortgage broker won’t be able to help you with.
Grants, Concessions and Government Schemes
One of the benefits of being a first home buyer is the grant options available to you. These grants may have a limited amount of placements and have specific requirements that you need to meet.
National Grants
- First Home Guarantee
- Family Home Guarantee
- Regional First Home Buyer Guarantee
Queensland Government
- Queensland First Home Owners’ Grant
- Home concession
- First home concession
- First home vacant land concession
Other states have grants listed on their relevant government websites. We take those into account if you are purchasing a property in the relevant state.
Home Buying Process
Finding your home isn’t just about the location, there are many variables that come into play to find the home for you.
Once you have an idea of the neighbourhood you wish to buy in there are many websites that show a range of properties available to purchase there. You can also find property data on the area as well as the current property trends. Working with us you may be given documents about these to help give you an informed decision when purchasing a property.
If you don’t have a buyer’s real estate agent yet, your mortgage broker may be able to recommend one to you.
Check out this Home Buying checklist we have. You can take it to the different properties, fill it out, and compare them with each other.
Applying for a Home Loan
If you don’t already have a mortgage broker now is the last chance to do it. A good mortgage broker takes into consideration your current and future goals, checks your eligibility with grants, and values your input throughout the process.
The alternative option is to apply directly with the bank, but be aware they are not bound by the best interest duty and do not need to compare their home loans to competitors. Mortgage brokers have a legal obligation to find the loan that best suits you.
The home loan you get has many variables to it, this includes the features you want, the interest rate, having the interest fixed or variable, and more.
On top of that, certain careers may have professional packages tailored to them. These professionals may include but are not limited to medico (Doctors, Nurses, Physiotherapists, ect) and lawyers.
Buying Your Home
Purchase
Once you’ve found the property you want to buy you can place an offer on it. If you have received a pre-approval from a lender you’ll be aware of your limit as well as any caveats to the pre-approval. Here you will negotiate with the real estate agent on the price as well as any conditions you want in place such as being subject to finance, pest inspection, or moving in by a certain date.
Have your solicitor or conveyancer look over the contract and get their advice. After a contract of sale will be signed and the settlement process will begin.
Auction
Having your home loan pre-approved as well as your deposit ready is important when bidding at an auction. Exchange and payment of the deposit occur on the day if you are the highest bidder and the home goes above the reserve.
Be aware that when you purchase a property at an auction it is common that there is no cooling off period or subject to certain conditions. There may be documents you may have access to before the auction that shows the building and or pest inspection.
Contract and Settlement
After the contracts have been exchanged the settlement process is started. Within this process, your loan has to be approved if you have not already had it approved.
You will move into your home until the final settlement day is reached.
Sometimes the previous owner may not have had the opportunity to move out even though they are required to, at this point your contract may have clauses put in place which will outline the process from here.
It is important to be kept informed of what is happening during the settlement process and that is why we at Read Finance keep you informed.