Log in / Sign up

Get in touch with one of our experts who can answer all your home loan related questions.

We love feedback!

Back to Inspire Home

A beginners guide to buying your first home

Buying your first property is an exciting decision that involves a significant amount of research and planning. As a first time home buyer, it can be difficult to know where to start and what is involved in buying a property. To make it easier, we have devised a list of things for you to consider before you make the decision to buy a property.

The most important thing to ask yourself before you even begin property hunting is if you’re ready to be a first time home buyer. If you are, consider the list below.

Am I able to put down a substantial deposit?

Ideally when buying a property a deposit of 20% or more of the purchase price should be saved and ready to go. Otherwise, it is possible to pay Lender’s Mortgage Insurance to a lender, which will enable you to make a minimum deposit of 5%. However, this may result in having to pay the lender higher interest rates on your loan. If you have the savings to make a larger deposit, it is worth your while to spend the money, as it will lower your loan to value ratio (LVR), which is the amount of the loan divided by the property’s purchase value.

Dreaming of purchasing a new home?

Find out how much you could borrow with our calculator.

Calculate now

australian-money-calculator

How good am I at saving?

If you are looking to buy a property, it’s important to know how much money you currently have, and if you’re able to pay back a loan. An updated record of your savings, income and spending will not only help you budget, but assist in getting you a home loan.

What is my credit score?

A credit score is a value that allows lenders to determine your creditworthiness and if you pose a risk to the lending institute. The score also assists financial institutes to calculate the interest rate being offered and the amount borrowed.

Checking your credit score is vital when you are a first time buyer, as an unblemished credit score will make the home loan application process easier. You can improve your credit score by making sure that you pay all bills, down-payments and credit cards on time and have no existing debt. It may be a good idea to examine your creditworthiness yourself during the early stages of your home loan process. You can obtain a free copy of your annual credit report at any online provider.

terraced-houses-sydney

What can I afford?

As much as you may want a waterfront mansion, it’s important to keep in mind the type of property you can actually afford. Take a step back and budget. Remember that beyond the house price itself and paying off the home loan, there are existing upfront costs such as legal fees, stamp duty and hidden costs, as well as moving and living expenses. Try calculating the total cost before buying the property.

Use our borrowing power calculator below to find out how much you could potentially borrow.

How much can you borrow?

Find out what your monthly repayments might look like.

Calculate now

What type of property suits my lifestyle?

Think about your situation and if there is a chance of it changing in the near future. Do you see yourself married with children in the next few years? Do you want a property for a short amount of time?

As tempting as jumping on the property ladder can be for first time buyers, it’s important to think about whether you see yourself living there in the future and what type of space will accommodate your needs or the needs of your family. It may also be worth investigating fixed rate home loans. Fixed repayments can allow you to make a stable financial plan if you are thinking of starting a family.

family-close-up-potrait

What suburb fits my needs?

Where you live can be just as important as the property itself. You may love a house, but if it’s far away from work, schools, friends, family, amenities and facilities, your dream property may turn into your worst nightmare. We recommend researching different suburbs to find the property that has a close proximity to the amenities that you value, or at least within a small radius of such places. It’s also a good idea to consider the crime rates and noise levels.

Carry out your own investigation by spending some time in the area. Try visiting the property on various days, at different times and not only on inspection days, as this will allow you to get your own feel for the neighbourhood and its residents.

Am I someone who enjoys renovating?

You may be tempted to buy a property that needs a little TLC, however it’s important to recognise if you have the funds as well as the motivation to renovate. Although home renovations are often shown as being easy and quick, realistically they’re expensive, challenging, disruptive to others and require lots of time and effort. If choosing a rundown property, this is something to keep in mind.

couple-painting

How do I know a property is in good condition?

You’ve found the perfect property in a great area, but before you put down a deposit it might be worthwhile to get both a private building and pest inspector to make sure the property is structurally sound and pest free. A second perspective will help you find any faults or issues you might have missed. Furthermore, pest inspections could save you a lot of money in future repairs and avoid health and safety hazards. Buying a property before taking these precautions can put you at risk of having to spend more money down the track.

Can you qualify for a First Home Owner Grant?

Each state and territory has a different policy around the First Home Owner Grant and most require your property to be below a certain amount. If you qualify, this can be a huge boost in helping you reach your 20% deposit and avoid paying Lenders Mortgage Insurance. Read more about the qualifying criteria for the First Home Owner Grant here.

Buying a property for the first time is a big decision, so making sure that your finances are in order and that you have done your research to find the property that is right for you is essential. If you’re ready to be a first time home buyer, let Lendi help you find the right home loan by applying online today with our simple, hassle free process.

Looking for a better home loan?

Search over 30 major and non-bank lenders in Australia.

Compare rates now

Tags: first home buyer, renovation, deposit, credit score

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
How much is your home worth?

How much is your home worth?

Get a free online property valuation with local sale and suburb statistics.

Get your property report

Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
Made with love at Circular Quay in Sydney, Australia. © 2019. All rights reserved.