An Ultimate First Home Buyer’s Guide

If you’re in the market for your first home, you’re likely excited, overwhelmed and perplexed on where to start. This ultimate first homebuyers’ checklist breaks down all the complicated, tricky steps of buying a first home into an easy checklist for you.

Ultimate first home buyers checklist

Knowledge is power – that means being thorough, realistic, and asking the right questions before signing any contracts. Follow this simple checklist to ask the important questions and make sure your first home is a smart choice.

#1 How much can I realistically save for a home deposit?

The more savings you have up your sleeve to make a deposit on your first home, the better.

Use a budget calculator to calculate your ongoing expenses and how much you can realistically save by a certain time. Decide what portion of your income you’re willing to spend on a mortgage.

The more savings you have up your sleeve to make a deposit on your first home, the better. Use a budget calculator to calculate your ongoing expenses and how much you can realistically save by a certain time. Decide what portion of your income you’re willing and able to spend on a mortgage.

In Australia, the average deposit is 20% of the purchase price. If you have more than this, your mortgage will be smaller and more manageable.

#2 What trends are shaping my local real estate market?

Understand the real estate market where you’re looking to buy. Consider trends shaping the area:

  • What prices have houses in this neighbourhood recently sold for?
  • What is the median value of properties in the neighbourhood?
  • Overall, are prices in the market increasing or decreasing? Is it a buyers’ or sellers’ market?
  • Which factors can cause properties to sell for higher or lower than average prices?
#3 Calculate your borrowing power

To find out how much you can borrow for a mortgage based on your income, you have two options.

Use an online calculator. An online calculator will give you a rough estimate of what you can afford so you can begin looking at properties within your price range.

Ask your chosen mortgage provider to calculate your actual borrowing power based on your income, assets and expenses. Now’s the ideal time to set a strict budget for yourself to ensure you don’t overestimate your ability to make mortgage repayments.

#4 Decide on must-have criteria

Prepare a list of ‘must-haves’ and ‘like-to-haves’ for your first home. Which features are most important to you? Narrow down a clear set of criteria to help judge potential homes:

  • Location – Would you prefer to live in the suburbs or the city? What is the neighbourhood like? Is the house close to shops, recreation and entertainment or public transport? Is the house at risk of flooding?
  • Design – Does the house have the right number of rooms to suit your needs? What size are the rooms? What direction does the property face and how will the temperature of each room change throughout the seasons? Does the house offer good natural light? Does the property provide enough space for parking?
  • Your lifestyle needs – Do you have children or pets? Would you like to live in a catchment area with access to good schools? Would you prefer a garden or a low maintenance apartment?
  • Condition – Are the building and roof structurally sound? Does the house have adequate electricity? Are there signs of termite activity? Will you need to perform renovations?
  • Looking ahead – What are the ongoing costs of owning the property?

Finally, and most importantly, what is a realistic price range? Consider trade-offs that will allow you to buy a more affordable home in your preferred area, such as living on the main road.

From here, compile a list of all available properties that fall within your price range and fulfil your specific criteria.

#5 Explore the market and live like a local

This is your time to investigate the market and what’s available:

  • Attend as many home opens and auctions as you can.
  • Talk to local real estate agents.
  • Ask people in the neighbourhood what it feels like to live here.
  • Savour meals at local restaurants.
  • Check out the local parks, playgrounds, shops and bars.

For each house that seems like a potentially good match, ask the agent the following important questions:

  • Can you show me a recent property sales report that demonstrates the value of the house?
  • Why is the vendor selling the house?
  • Are there any known issues with the property, land or neighbours’ properties?
  • How long has the property been on the market?
#6 Find the right home loan and calculate repayments

Choosing the right home loan is as crucial as choosing the right home. A poor choice in home loan could cost you tens of thousands of dollars in higher interest, application fees and penalties.

Research and take time to carefully compare multiple providers to select the loan that best suits your needs, lifestyle and budget. Test the approximate cost of repayments on different loan sizes to find your best fit.

Key questions to consider when choosing a home loan include:

  • Would you like a bank or non-bank lender?
  • How reputable is the lender?
  • Do you want a fixed or variable interest rate?
  • What are the fees?
  • Would you like an offset account or redraw facility?
  • Does the loan provider let you make one-off payments? Look for ways that may help you pay off your mortgage faster.
#7 Budget for upfront costs

First homebuyers often overlook the upfront costs they must make in addition to their mortgage deposit. When setting your budget, remember to factor in less obvious costs such as:

  • Legal fees
  • Pest and building inspection fees
  • Loan application fees
  • Lenders’ mortgage insurance (if borrowing over 80% of your home’s value)
  • Stamp duty
  • Money for essential repairs
  • Moving in costs
  • The cost of connecting utilities
  • Council rates
  • Water rates
#8 Choose a home carefully

So you think you’ve found the home. Great! Remember to ask yourself the following questions before committing to your dream house:

  • Can I truly afford to buy this property?
  • Am I really happy with this house and its location?
  • Am I buying this house to live in or as an investment property?
  • Have I arranged a building inspection to check the overall build quality?
  • Have I received a property condition report?
  • Have I arranged a pest inspection?
  • What is the quality of the fittings?
  • What is the level of insulation?
  • Will this house suit my future plans and the next stage in life?
  • Have I taken time to consult with a lawyer or solicitor before I sign any contracts?
Key points to remember

Understanding the right questions to ask will help you make smart choices when buying your first home.

Remember to:

  • Set a clear and manageable budget
  • Understand the trends shaping your local real estate market
  • Calculate your borrowing power and plan your repayments
  • Decide on ‘must have’ criteria for your home and possible trade-offs you are willing to make to afford a house
  • Attend a variety of house opens and auctions when investigating what’s available
  • Test what it’s like to live like a local
  • Research carefully to find a home loan that aligns with your needs, lifestyle and budget
  • Plan for upfront costs that need to be paid before purchasing a property
  • Double check the property is fit for living
  • Ensure you are fully satisfied with your first home

For more useful tips on buying your first home and all of your home buying queries, get in touch with our expert agents at Place property today on (07) 3858 0309.