Family & Lifestyle

First Home Buyer’s Guide

Decided to get onto the property ladder? Congratulations! It’s a big and exciting step into your future. But before you start planning the housewarming, there are a few steps you should consider. Here’s our first home buyers’ guide to help you on your way.

Get your dollars in a row

A “Pre-approval” from a mortgage lender is where you know how much a lender may be willing to let you borrow. You should have this sorted out before you look for a property to buy because it lets you know which properties are within your budget.

Choosing your first home

When looking for a first home, something you could consider is whether you’re buying for an investment or a lifestyle. Over time you may decide to rent out the property, or to sell it so you can purchase another property which suits your needs as your family grows, job changes location or you decide to up or down-size.

Affordability is something else to consider and it could mean compromising on location, property type or condition. An apartment which is in need of a little love and care, but is within your price range may suit you better than a recently renovated house which is at the top limit of what you can afford.

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Finding the right mortgage

For most people there’s a good chance that the home loan (or mortgage) you get to buy your first home will be the biggest financial commitment you will ever make. It could be a commitment for 25 to 30 years (or more) so you should choose carefully.

A mortgage is made up of the principal, which is the actual amount of money borrowed, and interest on that amount. You can choose to repay the loan on either a fixed rate (where the repayments are fixed) or variable rate (which means the repayments change as the market interest rate changes) or a combination of both.

There are also ‘interest-only’ loans available. Some lenders can offer other products too, like offset accounts or credit cards.

Up-front costs before you get the keys

In addition to the purchase price of the property and the initial deposit, some other costs to consider before moving in are:

  • Stamp Duty
  • Conveyancing
  • Building and Strata Reports
  • Essential renovations and repairs
  • Removalist fees
  • Utility set up

Some home buyers may be exempt from stamp duty on properties up to a certain value. Each Australian State or Territory has its own rules around stamp duty exemption and concessions, so the rules should be checked in whichever State the buyer is purchasing a property in.

Some states may also offer first home buyer grants to help cover some of these up-front costs.

Solicitors usually manage the documentation of the sale, such as building inspections and strata reports (if you’re buying an apartment or townhouse) which are needed before the sale goes through. These reports identify any major issues or repairs that need to be made to the property, before an offer is made.

Ongoing costs once you have the keys

Once you’ve bought the property there are ongoing fees to pay, including council and water rates (usually quarterly) in addition to the regular mortgage repayments and, if the property is an apartment or townhouse, strata levies. The advertising for the property will usually show how much these levies and rates are, but if they don’t, a real estate agent will be able to provide this information.

Home and Contents Insurance could also be a worthwhile investment for a first home buyer, as this insurance may cover the cost of repairing or replacing personal household possessions.

It’s really important to only commit to what you feel comfortable with, and what you can realistically afford. If the time is right, and you carefully prepare and research your options, it can be a really exciting and empowering decision to buy your first home.

If you’re about to embark on the journey of buying your first home and getting a mortgage, you may want to consider getting a type of insurance that could help you cover any financial outgoings should the unexpected happen. Life Insurance can help your loved ones cover mortgage costs and bills if you pass away or are diagnosed with a terminal illness, whilst Income Protection can pay up to 85% of your monthly income up to a maximum of $10,000 if you’re unable to work due to illness, injury or redundancy, helping maintain your lifestyle whilst you get back on your feet.

Products issued by TAL Life Limited ABN 70 050 109 450 AFSL 237848. Involuntary Unemployment Cover issued by St Andrew’s Insurance (Australia) Pty Ltd ABN 89 075 044 656 AFSL 239649.

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