Top Financial Tips For First Home Buyers

Market Insights
8 years ago
3 minutes

With investor bank-lending tightening, first home buyers are now feeling less competition for that desired home. Whilst there are many facets to organising your finances for your first home purchase, here are five of the top tips to getting your foot into the market.


1.         Save

And by save, we mean commit to it. In today’s market, you need a minimum of 10% deposit, but by having more than 10%, your chances of getting a loan not only significantly increase, but your rate and repayments will be lower. The more you save now, the more you’ll save later.

That may mean no partying for a few months, or no expensive dinners or those latest designer shoes. If saving for a home is a priority of yours, be serious about it. You need to start saving wherever you can – and if that means moving back into your old room at your parents’ house for six months, then so be it!


2.         Do your research

State governments have different laws when it comes to first home buyers. These grants have been set up in order to help those entering the market for the first time. There are a lot of concessions and rules to being successful in receiving the grant, so make sure you are reading the correct information for the state you are living in, and purchasing in.

In Victoria, you may receive $10,000 for buying or building a new home under $750,000.

There are a range of exemptions running from First-home buyer duty reductions, to off-the-plan concessions – so make sure you do your homework!


3.         Rid yourself of debt

This is an important one. Whilst banks may not penalize you for having outstanding debt, and in some case reward those who have proof of paying off large debts (especially personal loans), it is almost always better if you approach your bank with nothing in the red.

Get your car-loans and credit cards paid off, your home-loan should be your main priority, even if that means selling your new car for a cheaper one.


4.         Know your limitations

Do not over-purchase. Whilst the bank may say you can borrow $500,000, the question really remains, can you afford to meet those monthly repayments? Whilst you may be earning enough to pay off that loan now, make sure you have a buffer just in case you get injured or lose your job. Whilst you may think ‘it will never happen to me’ – you have as much chance as anyone else.

To make sure you are borrowing the right amount, go through all your debts, all your current repayments, and be completely honest with your expenditure. You are better off over-estimating the amount you spend on a monthly basis, rather than under-quoting – be ruthless.


5.         Get someone to help

Chances are that as a first home buyer you are new to real estate. If that is the case, then considering a financial planner and budgeter could help you achieve your budgeting goal. Mortgage brokers will help attract you to a home loan that suits you, and will also make yourself more prepared for that daunting process of getting pre-approval.