7 steps to buying your first home

So you’ve decided to buy your first home but don’t know where to even start? Don’t worry, you don’t have to throw yourself in the deep-end to get to where you want to be. Here’s our step-by-step guide to help you make this a relatively inexpensive and low-stakes process in the cut-throat property market. 

Step 1: Determine your budget

It’s time to do the maths behind your day-to-day expenses and income. Dig into how much you (and your spouse if applicable) earn every month and where you’re sending your hard-earned dosh. This includes non-negotiables like bills, insurance, projected rent, supermarket essentials, public transport or petrol costs...Subtract the expenses from the total income and the number that you have is roughly what you can afford to repay each month on a loan. 

Hot tip #1: Expect the unexpected. Start a buffer fund for heaps of expenses involved down the road. That way, you won’t have to dip into your housing deposit later on to pay for unexpected costs. 

Step 2: How much can you borrow

Now that you know how much you can devote to mortgage repayments, find out how much you can borrow by bringing in extra help. You can enlist a mortgage broker to give you a range of options, help you work out the best option for your situation and calculate the costs you will face. You can save a lot of money on the life of your loan if you find a lender that is 0.5 – 1% less than everyone else. 

You’ll need:

• Proof of income such as pay slips or recent tax returns
• Proof of your savings history
• And other documents that may be required by specific lenders

Hot tip #2: We recommend building a squad of experts to help you get through the process as smoothly as possible. It could include: a financial coach, a mortgage broker, a conveyancer, a real estate agent and a property solicitor. 

Step 3: Get approval

Having found the best possible deal, it’s time to apply for a home loan and get approval. It’s likely you will be issued with either a ‘home loan guarantee certificate’ or a ‘pre-approval certificate’. What does that mean? It means subject to a few conditions, your home loan either has been or will be approved when you find the property you want to purchase. These loan approvals are only valid for around 6 months but sometimes up to 12 months. If it expires, contact your broker and see if it can be extended or if you have to reapply. 

Step 4: Find your home

Once you’ve designed a budget and got your pre-approval, it’s time to get a clear picture of your future home – whether it’s a cabin in the woods, a swish Mid-century pad or an inner-city apartment. Ask lots of questions and have the home inspected for faults including:

• building inspections
• pest inspections
• electrical inspections
• strata inspections and
• a land/property survey

These inspections are likely to cost anywhere between $200 and $600 each. It seems like a very exxy process but from a planning perspective, it is worth it that you find out about any hidden nuisance that needed maintenance down the road, address small fixes, or even find  full-on dealbreakers

Hot tip #3: Your home inspection will find problems no matter what but don’t let that get in the way of a great home. So much can be changed or fixed to meet your specific preferences. 

Step 5: Making an offer

If you’re happy with the property, carefully make the next move to price negotiations. It helps to include a mentor figure who has experience buying property to come along. If the home you crave is being sold via auction, just make sure you really want the property before you raise your hand. A few things to note: 

• Be sure you have done all the necessary inspections beforehand
• Remember to stick to your price limit. 
• Check the terms and conditions of sale and the vendor’s statement well in advance of the auction. 

Another way to buy property is by private treaty or sale through a real estate agent or directly from the owner. You can verbally offer to the seller’s real estate agent or via a sales summary prepared by your solicitor. 

Once it’s accepted you can pay the deposit to the real estate agent or use a deposit bond – a guarantee issued by an insurer guaranteeing the payment of the initial deposit – to delay payment until settlement. 

Hot tip #4: Don’t be afraid to ask all questions and seek knowledge to feel equipped and informed. It’s way better than feeling like you don’t understand what’s going on. 

Step 6: Exchange contracts and complete settlement

At the time the deposit is paid, contracts are exchanged between you and the seller. This is where your conveyancer or solicitor comes in. Simply put, their job is to make sure the property contract is legal and it’s correct for the transfer of property title from one person to another. 

Finally you can sit back as the work is now out of your hands. Once the contracts are exchanged, you are legally bound to proceed with the purchase of the property unless a special condition is breached that is listed in the terms and conditions of the contract (Just make sure that you insure the property after this exchange). 

Step 7: Settlement at last

It’s the day that you or your representative meets with the vendor to swap your cheque with their title of ownership. This certificate will quickly go to your lender. You’re now the proud owner of your new home. Let this home be your pride and joy. 

Hot tip #5: Be in it for the long run, take it slow and plan ahead. Don’t be fooled by the happy house-flippers on the news. Experts largely agree that staying put in a house for at least five years means you’re more likely to see that all-important return on investment. If you sell the house too soon, the cost of buying and selling could set you back. 

If you’re overwhelmed by the prospect of buying your first home, get in touch with a broker and you’ll get so much out of their helpful service. There’s nothing more gratifying than knowing that you have guidance from an experienced person and you can manage your full-time work and family while going through the whole process. Obviously, it’s very complicated and challenging but because you have help and another voice in the room, together you can wield top-notch results– we wouldn’t imagine doing it differently.