FIRST HOME BUYER GUIDE

There a multiple ways of having a deposit for your first home purchase, planning and knowing what solution is right for you is the first step in making your home buying journey a success;

• Guarantor - If you have a parent/s that owns a property and they are comfortable being a guarantor for you, you may be able to use the equity in their property as the deposit for your purchase. This could mean that you could purchase a property with little to no savings.

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• Savings - If you are looking to save for a deposit, you need to be able to save a minimum of 5% of the property value + any associated costs (stamp duty, transfer fees, solicitor fees etc.) we recommend saving at least 8% of the property value to cover these expenses if you are looking at property valued over $500,000 in QLD

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• First Home Super Saver (FHSS) - There is an option to salary sacrifice your pay or make additional payments (up to $15,000 per year and $50,000 in total) into your super to help build your deposit. The main benefit of this is that the money you deposit into the scheme may be taxed at a lower rate than your income tax.

• Information on the FHSS can be found here

• A more in depth guide can be found here

• Gift - If you are able to receive a gift from relatives to go towards your deposit

The Australian government have schemes and grants available to assist first home buyers break onto the property ladder. We recommend checking your eligibility for these to determine if you can use them to assist in buying your first home;

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• First Home Guarantee - This is a government backed scheme that allows first home buyers to purchase a property with as little as a 5% Deposit without the need for hefty LMI (lenders mortgage insurance) Fees.
  Terms, conditions and eligibility requirements apply

  • You can check your eligibility here

  • A more in depth guide can be found here

• First Home Owners Grant (FHOG) - This is a government incentive that differs from state to state. In Queensland the FHOG is a grant of $30,000 when you purchase or build a brand new house under $750,000. A new home is a brand new dwelling that has not been previously occupied as a place of residence or sold as a place of residence.

  • Information FHOG can be found here

  • A more in depth guide can be found here

Along with your deposit the amount a lender is willing to lend you plays a crucial role in the price of a home that you will be able to look for, it is crucial that you understand and know your borrowing power💪 so that you know exactly how much you are able to offer on a property;

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• Pre Approval - A pre approval can be a great way to confirm with certain lenders how much money they will be willing to lend you.
  Each lender offer different types of pre approval;

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• Fully Assessed Pre Approval - these are the most accurate and valuable pre approval that you can get. This type of pre approval means that the bank has had someone check over all of the information you have supplied and has confirmed that you meet the banks eligibility.

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• Automated Pre Approval - This is an automatically generated pre approval based on the information provided, this is not verified by anyone at the bank and in my opinion isn't worth the paper its written on. 

The most exciting time in the journey can be the endless nights dreaming and searching for that dream property, while exciting, it in my opinion is the most important phase, this is going to be where you live for the foreseeable future and you want to make sure its somewhere you want to be! It can be a very long and stressful process, there are a few things that you can do to help narrow your search and find the right property sooner;

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• Know what you are looking for - Understanding exactly what you are after can ensure that you don't waste time looking for properties that wouldn't be suitable for you.

  • If you need a 3 bed 2 bath home set your search criteria to this as a minimum and stick to it.

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• Set a Price Limit - Once you have spoken to your local mortgage broker and have worked out what your max property price is, you need to set a budget to what you are comfortable with, input it in your search parameters and stick to it!

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• Location - You need to narrow the location that you are looking in for an area that has property within your budget while also being somewhere that you want to live, I like to narrow it down to a maximum of 5 suburbs.

So you've found the perfect property🏠? Time to get down to business!

Making an offer can be very daunting for most Australians as its really the only time in our lives that we are able to barter or negotiate on what we deem to be a fair price (on home soil at least).

The old saying goes "a property is only worth what someone is willing to pay for it"

Going into the negotiation stage with a clear mind and plan is crucial to ensure you get a property at the price you want;

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• STICK TO YOUR BUDGET - Its easy to get carried away with a property that we love, but you need to understand that you risk wasting everybody's time if you put in an offer that you can't afford.

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• Know its worth - Comparable sales in the area is the measuring stick  used to value properties. Do your research on recently sold properties in the area, save these properties and use them as bargaining tools. If you see a property of better quality that has sold for less than what the asking price on the property you are looking at, mention it and base your offer around this.

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• Don't be afraid to try your luck - A lot of properties that are advertised online listed with a price or 'overs over' is often times a best case scenario for the seller. If you think a property is worth less than what it is listed for, Don't be afraid to present this to them, the worst thing they will say is "no"

  •  Remember - a property is only worth what someone is willing to pay for it

A building and pest inspection is something that could save you a massive headache not to mention thousands of dollars, this is crucial in finding any defects or pest problems before you take full legal and financial responsibility of the property, some of the reasons why we believe that this is important;

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• Property Damage - This can be picked up by the inspector and will give you a good understanding of if their is any structural damage to the property.

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• Pests - The last thing that anybody wants is to buy a property riddled with termites, for piece of mind and to avoid this risk you should always get a report completed

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• Negotiation - If there is minor damage that you feel could be easily rectified, we have seen cases when people have been able to negotiate a discount on the purchase price to offset this cost.

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• Safeguarding Yourself - If you have included a building and pest condition in your contract of sale (I always recommend doing this) and you find enough issues in the report that make you want to terminate the contract, you are able to do this based on that clause. While it may cost you a few hundred dollars for the inspection it might end up saving you thousands of dollars if there is major repairs required to the property.

Congratulations! Your offer has been accepted!🎉🎉

Outside of the sold sticker going up and having the keys in your hand this is the most exciting part of the journey!

There is still a few things that need to take place before the house becomes yours;

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• Contract Signing - I always recommend engaging a solicitor/conveyancer to run through your purchase contract with you, just to make sure there aren't any nasty surprises.

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• Unconditional Finance Approval - Lenders will issue you with a formal/unconditional finance approval once they are satisfied with the following;

  • Valuation - They will have an independent valuer compare the price you are paying for the property to what they think it is worth to ensure that they agree.

  • Financial Situation - if you were pre approved they will want to ensure no material changes have taken place since then, otherwise they will need to look at your financial situation again in full to ensure they are comfortable lending you the required amount

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• Loan Document Signing - Once your loan has been unconditionally approved, the lender will issue loan documents, these are the formal documents, offer and contracts. We need to analyze these before signing to ensure they are correct.

All of the finance and nitty gritty work has been sorted and we are ready for settlement, in a nut shell settlement is the time in which the exchange of funds and ownership take place;

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• Solicitor/Conveyancer - Your chosen solicitor/conveyancer will act on your behalf to ensure that this goes through as smoothly as possible.

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• PEXA - This is a digital platform that has become the most common settlement platform in which the bank, the seller and you will have representation through your solicitors - this is the platform for which all of the accounts are balanced and processed.

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• Remainder of Deposit - During the document signing process you will have nominated an account for the remainder of your deposit to be drawn from. I always recommend having this money across into this account at least 48 hours before settlement to avoid any delays. Your mortgage broker and solicitor will be able to give you guidance on exactly how much you will be required to have available in this account on the settlement date.

• Property Damage - This can be picked up by the inspector and will give you a good understanding of if their is any structural damage to the property.

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• Pests - The last thing that anybody wants is to buy a property riddled with termites, for piece of mind and to avoid this risk you should always get a report completed

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• Negotiation - If there is minor damage that you feel could be easily rectified, we have seen cases when people have been able to negotiate a discount on the purchase price to offset this cost.

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• Safeguarding Yourself - If you have included a building and pest condition in your contract of sale (I always recommend doing this) and you find enough issues in the report that make you want to terminate the contract, you are able to do this based on that clause. While it may cost you a few hundred dollars for the inspection it might end up saving you thousands of dollars if there is major repairs required to the property.

Congratulations, you are now a property owner!! 🎉🏠

All off the hard work has been justified and you now have a place to call your own!

You will get a call or a notification from your broker or bank that settlement has been completed.

Once this happens you can organize with the real estate agent a time when you can pick up the keys to your new place!

Time to move your furniture in and make it a home!

 This guide offers a concise overview of the home buying experience, outlining key steps and considerations. Please note that it provides general advice only. We strongly recommend assembling a team of expert advisors to support you throughout your home buying journey. Their expertise will prove invaluable in ensuring a smooth and informed process. 

If you would like to talk further with one of our experienced mortgage brokers, please don't hesitate to contact us.

We would love to help you make your dreams a reality.