First Home Buyers Are Still Getting Into the Market
Hats off to Australia’s first home buyers! Interest rate movements and rising property prices haven’t stopped them working towards owning a home. Lending data from the Australian Bureau of Statistics consistently shows first home buyers make up a significant share of new home loans each year, even when borrowing conditions are tight.
It takes more than grit and determination to buy your first home, though. A few handy hints can help too. If you’re hoping to become a first home buyer, here are five tips to help you get home loan-ready.
Who counts as a first home buyer?
Generally, you’re considered a first home buyer if you (and anyone you’re buying with) haven’t owned residential property in Australia before, or in some cases haven’t owned one in the past 10 years, depending on the state or territory grant or scheme you’re applying for. Being a first home buyer can unlock benefits like reduced deposit requirements, stamp duty concessions and government grants.
1. Make a visit to your mortgage broker your first step
First home buyers are often unsure about what’s involved in buying a home. That’s completely normal.
A mortgage broker can help you understand where you stand in terms of loan approval, the costs you should plan for, and the steps you can take now to strengthen your finances before you apply.
2. Save, save and save some more
Lenders like to see a decent track record of regular saving. It shows you have the discipline to manage home loan repayments.
Take a look at your budget, work out where you can trim back, and consider funnelling as much as possible into savings. It may mean cutting back on a few luxuries for a while, but it’s not forever, and the more you save now, the less you may need to borrow.
3. Consider lowering your credit card limit
When you apply for a home loan, lenders are often more interested in the limit on your credit card than the balance you’re carrying. That’s because you could, in theory, max out your card after buying a home, which may affect your ability to manage mortgage repayments.
Many Australians carry a credit card limit well into four figures, even if they rarely use it. Shrinking this down with a quick call to your card issuer could improve your borrowing power and help get you over the line for the loan you need.
4. Check out first home buyer support schemes
There’s a range of potential support for first home buyers, from state and territory First Home Owner Grants to possible savings on stamp duty.
A broker can explain what you might be eligible for, but it pays to do some research of your own too. Some support payments are only available if you buy or build a new home, and most have property price caps that vary by location, so it’s worth checking the current rules before you start house hunting.
5. You may not need a 20% deposit
Sure, a 20% deposit is a target worth aiming for. But you may be able to buy with a lot less.
Under the Australian Government’s First Home Guarantee, eligible first home buyers can currently purchase with as little as a 5% deposit and avoid paying Lenders Mortgage Insurance (LMI), with the government guaranteeing the shortfall to the lender. There are also options like the Regional First Home Buyer Guarantee and Family Home Guarantee for those who meet the criteria.
Eligibility rules, price caps and places available can change over time, so it’s worth checking your current eligibility with a broker rather than relying on what you’ve read elsewhere. That might mean you’re more ready to buy than you think.
First home buyer FAQs
How much deposit do I need to buy my first home?
It depends on the loan and any government schemes you use. Some lenders require a 20% deposit, but eligible first home buyers may be able to buy with as little as 5% through schemes like the First Home Guarantee, avoiding LMI in the process.
Do first home buyers pay stamp duty in Australia?
It depends on the state or territory and the value of the property. Many offer stamp duty concessions or exemptions for eligible first home buyers, particularly under certain price thresholds.
What’s the benefit of using a mortgage broker as a first home buyer?
A broker can assess your borrowing power, explain what grants and schemes you may be eligible for, compare lenders on your behalf, and guide you through each step of the process, so you’re not figuring it out alone.
Ready to take the next step?
Call us today for a FREE chat about buying your first home. We’ll help you understand where you stand, what support you may be eligible for, and how to find a home loan that fits your needs at a competitive rate.