First Home Buyer Simple Steps

Published On: 23 May 2024

Buying your first home is both exciting and daunting. It can also be a stressful time as there is a lot to think about.

That’s why we’ve put together some simple steps to follow when buying your first home.

STEP 1: WORK OUT YOUR BUDGET

The first thing you need to do is organise your finances  and find out how much you can afford to borrow.  The amount you can borrow will depend on:

  • what you have managed to save,
  • your income
  • any debts you may have.

It’s a good idea to contact your mortgage broker or bank who can assess how much you will be able to borrow. Check out bank and mortgage broker websites, many of them have calculators that will give you a good idea on how much you may be able to borrow AND what your mortgage repayments could be.

Many mortgage lenders will ask for a deposit of at least 20% of the purchase price of the home you are interested in buying.

If you have a good credit rating and a reliable income, you may be able to buy a house with a smaller deposit – but you will likely need to pay for Lenders Mortgage Insurance (LMI). The amount of LMI you will need to pay will depend on the size of your deposit, the more you have the better off you will be.

First Home Owner Grant

There is State Government First Home Owner Grant available to help you buy your home.

To be eligible for the grant you’ll need to meet these conditions:

  • You are buying a *new home (house, flat, unit, townhouse or apartment)
  • That home will be your primary place of residence
  • The market value of the property is $650,0000 or less where the contract was entered into on or after the 15th June 2023
  • At least one applicant must be an Australian citizen or permanent resident. New Zealand citizens permanently residing in Australia who hold Special Category Visas may also apply.
  • You and your spouse/partner have not previously received a first home owner grant in any state or territory of Australia previously
  • Are at least 18 years old

*A new home is one that has not been previously occupied, or sold as a place of residence, and it includes a substantially renovated home.

Your Broker or Banker will assist with the application form to apply for a grant, or alternatively you can lodge an application with Revenue SA. The application must be made within 12 months of purchasing your property.

Stamp Duty Relief for Eligible First Home Owners

You can apply for stamp duty relief on the transfer of land if you are buying a home that will be your principal place of residence.

Relief is available for new homes and also vacant land to build your new home on.

Homes valued up to $650,000 will receive full stamp duty relief. Vacant land up to the value of $400,000 will also receive full stamp duty relief.

Your Conveyancer will assist with completing the application form & will submit it to Revenue SA on your behalf with supporting documentation. You can also find more information at Revenue SA website.

Be aware of hidden costs!

When you’re buying a home there are additional costs that you need to take into account and ensure you have enough money saved to cover those costs
Those costs can include:

  • Stamp Duty
  • Land Services SA Transfer Registration Fee
  • Council rates
  • Water rates
  • Emergency Services Levy
  • Strata or Community fees (if you’re buying a unit)
  • Building and pest inspections
  • Moving costs
  • Connection costs for gas, electricity, water
  • Borrowing costs (if you opt for a fixed home loan, you may need to pay an annual fee).

Your Conveyancer will let you know of the costs that are included in your property settlement by providing you with an itemized Settlement Statement.

STEP 2: COMPARE HOME LOANS

When you compare loans from different lenders, you need to compare variable vs fixed term loans and their rates.

Variable rate home loans:

This is a home loan with an interest rate that may change over time. You can make extra repayments to pay the loan off faster.

Fixed rate home loans:

This is a loan that offers a fixed interest rate for a set period (usually a maximum 5 years). You might not be able to make additional repayments and there may be an annual fee. If you decide to sell your home & repay a loan during the fixed interest rate period, the Bank may also charge additional ‘break costs’.

You can combine your variable and fixed rate home loan. So, you could opt for a fixed term loan for the first 5 years, and then have a variable rate after.

STEP 3: RESEARCH POSSIBLE HOUSES

Consider your options when looking at properties you may want to live in.

Decide what you want in a house
  • How many bedrooms do you need?
  • Do you want a backyard, and how big or small should it be?
  • Would you prefer a house, unit or apartment?
  • Do you want something brand new or are you willing to renovate?
Look at different areas and suburbs
  • What’s the commute like to your work?
  • Is everything you need nearby? Shops, schools, parks etc.

STEP 4: GO TO OPEN INSPECTIONS

Take your time.

Go early and really look at the house.

Ask the agent Relevant questions in relation to the house you are viewing.

See what has sold in the area

That information may help you negotiate when you make your offer.

Get finance pre-approval

It can help you make offers on properties and keep within your budget

Consider a Building & Pest Inspection

I can be a good idea to find any issues that may not be visible to the untrained eye

STEP 5: BUY YOUR HOME AND SETTLE

It’s never too early to engage a Conveyancer. They can guide you through the buying process, review your Contract and Form 1 and offer advice.

As soon as you’ve found your dream house you’ll want to make an offer to buy it. The offer is made in writing and sent to the real estate agent. If the seller accepts your offer, the agent will notify you and begin drafting a contract. Once they send the contract through, make sure you take the time to read through it carefully.

You should ensure that your Conveyancer reviews the Contract and Form 1 so that your interests are looked after BEFORE you sign anything.

You will generally have two business days as a cooling off period, and this begins once you have signed the contract and have been served the Form 1. Your building and pest inspection should be completed before the cooling off period expires. This will give you the option to exit the contract should anything untoward/unexpected show in the inspection reports.

After the cooling off period ends, you need to pay a deposit to secure the property.

Finally, your Conveyancer will handle the process to Settlement and before you know it, Settlement Day will arrive and you’ll own your very first home – Congratulations!