If you’re thinking about, or aren’t far away from putting some money down on your first home, we look at some of the statistics and major pointers you’ll want to know upfront.
According to research on first home buyers in Australia2:
It’s not just the purchase price of the property you’ll need to budget for. There will be added costs such as stamp duty, legal fees and interest charges, which also have the potential to rise and fall.
For a breakdown of the upfront and ongoing costs you’re likely to come across, check out our article – How much does it really cost to buy property?
Lenders generally ask for a minimum deposit of between 10% and 20%. Others may offer you finance without this if a family member pays the deposit, signs as guarantor or goes in as a co-borrower.
ASIC says aiming for a deposit of 20% or more of the purchase price, plus enough to cover added costs, is a good goal to have3.
A bad credit report could affect your ability to get approval on a loan.
To ensure you buy something you love and for the right price, things to investigate include:
The First Home Owner Grant is a national scheme. If you’re unsure about eligibility, contact your state revenue office and be sure you apply with enough time.
Certain state and territory governments also offer additional incentives to first home buyers, some which involve stamp duty concessions, so take some time to research these too.
Depending on whether you’re after a basic package or one with added features, home loans can vary a lot when it comes to interest rates and fees.
You should also consider the potential advantages of various home loan features, which may allow you to make extra repayments, redraw funds, or use an offset account which can reduce the interest payable.
Remember, it’s worth shopping around to find the best deal and also asking your lender if they can do better than the rate that is being advertised.
When you see a home loan advertised, you’ll see two rates displayed—the interest rate and the comparison rate, which incorporates the annual interest rate as well as most upfront and ongoing fees.
Some home loans, with lower interest rates, are laden with fees, so while they appear cheap, they aren’t. The comparison rate reveals this and enables you to compare loans more accurately.
It’s a good idea to have your loan pre-approved so you know exactly what you can borrow. You’ll also need formal approval closer to purchasing and to have your deposit ready, or you may miss out.
As part of the process your lender will advise if lender’s mortgage insurance is required, although this is usually only the case when you’re borrowing over 80% of the purchase price.
These inspections will alert you to structural problems or defects that may not be visible to the eye—asbestos, termites, electrical, ventilation and serious plumbing faults.
Meanwhile, a strata report, if you’re buying a townhouse or apartment, can tell you whether the property is well run, well maintained and adequately financed.
If you’d like to talk to an Invest Blue home loan specialist, you can contact us here.
It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.
This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.