Buying My First Home: A Comprehensive Guide and Checklist in 2024

Introduction

Buying your first home is one of the most exciting milestones of your life, but it can also be one of the most daunting. Sadly, recent interest rates have risen, and the soaring cost of living and sky-high rents have left many Australians feeling like they’ll never buy their first home.

We’ve written this new guide to give you greater confidence and clarity when buying your first home.

If you’re looking to get personal guidance from a professional Sydney mortgage broker, or Melbourne mortgage broker – simply jump to those links provided. You’ll find the best brokers in your area and can contact them immediately.

However, if you want to understand the home-buying process first, you’re in the right place. Let’s get started.

Understanding the Basics

Current Market Overview

The best place to start as a first-time home buyer is to understand the current market. Looking at prices helps to set realistic expectations and goals about what you can afford. As of 2024, the Australian property market continues to experience dynamic changes. The median house price has seen a steady increase across major cities. According to recent data, the median house price in Sydney is approximately $1.45 million, Melbourne is $950,000, and Brisbane is $950,000.

• John McGrath, Real Estate Expert: “The property market is evolving rapidly. First home buyers need to stay informed about median house prices and market trends to make smart purchasing decisions.”
• Cate Bakos, Buyer’s Agent: “Understanding the current market conditions is crucial. First home buyers should research median prices in their desired areas and be prepared for competition.”

Legislation and Incentives

When you crunch the numbers on what you can afford, remember that you may be eligible for government incentives. Several incentives are offered to make things more affordable for first-time home buyers.

The First Home Owners Grant (FHOG)

The FHOG is a one-off payment to eligible first-time home buyers, varying by state and territory. The table below outlines what first-time home buyers can receive in each state in 2024.

State First-time home buyer grant What can you use it for?

Stamp Duty and Transfer Duty Concessions

You may also qualify for stamp duty (or transfer duty) concessions, significantly reducing your upfront costs.

• In New South Wales, first-time home buyers are exempt from paying transfer duty on new and existing homes valued at or less than $800,000 or a block of land valued at or less than $350,000.
• In Victoria, first-time home buyers are exempt from paying stamp duty on homes valued up to $600,000. A concession is available for homes valued between $600,001 and $750,000 (provided you will live in the house as your principal place of residence).
• In Queensland, first-time home buyers can qualify for varying stamp duty concessions for properties valued up to $550,000 (the exact amount depends on the purchase price).

For a full breakdown across states, check out our comprehensive guide on stamp duty exemptions.

The First Home Super Saver Scheme (FHSS) 

Under the FHSS, you can make voluntary contributions to your superannuation to save for your first home deposit. Because these contributions are taxed at 15%, which is most likely lower than your marginal tax rate, it can help you save for a deposit more quickly. You can then withdraw up to $15,000 of your voluntary contributions every financial year for your deposit.

The First Home Guarantee (FHBG) and Regional First Home Buyer Guarantee (RFHBG)

FHBG and RFHBG allow you to buy a home with a lower deposit, between 2% and 5%. The government guarantees the remaining amount to reach the 20% you need to avoid paying Lenders’ Mortgage Insurance (LMI).

• Peter Switzer, Financial Commentator: “Government incentives like the First Home Owners Grant can significantly reduce the financial burden for first home buyers. It’s essential to understand what’s available in your state.”
• Jane Slack-Smith, Property Investment Advisor: “Legislation changes can impact your buying power. Stay updated with the latest incentives and stamp duty concessions to maximise your benefits.”

Preparation: Getting Your Finances Sorted

Setting a Savings Goal

One of the first steps in buying your first home is setting a savings goal. This includes the deposit – typically around 20% of the property’s purchase price – and additional costs such as inspection, stamp duty, legal, and moving expenses. Establishing a savings plan in a dedicated savings account makes it easy to track your progress.

• Nicole Pedersen-McKinnon, Finance Educator: “Setting a clear savings goal is the foundation of home ownership. Automate your savings to build a deposit steadily without feeling the pinch.”
• Effie Zahos, Money Expert: “Every little bit counts. Consider high-interest savings accounts or term deposits to grow your deposit faster.”

Pre-Approval for a Home Loan

Obtaining pre-approval for a home loan gives you a clear understanding of your borrowing capacity and shows sellers you are a serious property buyer. It involves submitting financial documents to your lender, who will assess your ability to repay the loan based on your income, expenses, and credit history.

• Chris Gray, Property Expert: “Pre-approval gives you a clear budget and increases your bargaining power. It shows sellers that you’re serious and financially ready.”
• David Koch, Financial Advisor: “Lenders want to see stability. Ensure your finances are in order before seeking pre-approval to improve your chances of success.”

Genuine Savings

Lenders often look for genuine savings. What does that mean exactly? It refers to funds you have accumulated over time rather than non-genuine savings such as gifts from family members. This demonstrates your ability to manage money and commit to long-term financial goals. Having genuine savings can also improve your chances of securing a home loan with favourable terms.

• Margaret Lomas, Property Investment Specialist: “Genuine savings demonstrate discipline. Lenders look favourably on buyers who can show consistent saving habits over time.”
• Ben Kingsley, Property Advisor: “Avoid relying on one-off gifts. Lenders prefer seeing a history of savings to gauge your financial responsibility.”

Engaging Professional Eliminates the Stress of Buying Your First Home

The first time you ride a bike, you need help from someone who’s done it before. The same is true the first time you buy a home. Engaging the right professionals can help you avoid common mistakes and ensure the process runs smoothly from start to finish.

Here are the professional to engage when buying your first home.

Mortgage Broker

If you’re confused about applying for finance, a professional Sydney mortgage broker, Melbourne mortgage broker, or Brisbane mortgage broker can help. Mortgage brokers have extensive knowledge of the home loan market. They understand the different lenders’ criteria and can identify the best loan for your needs. They also have access to exclusive deals and rates not available directly to the public.

Mortgage brokers streamline the process by handling the paperwork, helping you obtain pre-approval, negotiating with lenders, and ensuring all documentation is correct and submitted on time. This means less work for you and saves you money in the long run.

What the Experts Say

• Mark Bouris, Mortgage Expert: “A good mortgage broker can be a game-changer. They navigate the complex loan landscape and find products tailored to your needs.”
• Sally Tindall, RateCity Research Director: “Mortgage brokers have access to a wide range of lenders. They can secure better rates and terms than going directly to banks.”

Real Estate Agent

Every week, thousands of new homes are listed for sale in Australia. Sorting through your options can take a lot of time and effort. That’s where a savvy real estate agent can help in your home-buying journey. They provide insights into the property market, find suitable homes that meet your criteria, arrange inspections, and even negotiate on your behalf. Choosing a reputable agent with local knowledge can help you find the right property and avoid a costly mistake.

What the Experts Say

• Tom Panos, Real Estate Coach: “Choosing the right real estate agent is crucial. Look for someone with local expertise and a strong track record in the area you’re interested in.”
• Andrew Winter, Property Expert: “A good agent knows the market inside out and can provide valuable advice on property values and negotiation strategies.”

Buyer’s Agent

A buyer’s agent helps you find and buy a home. Unlike a real estate agent who works for the seller, a buyer’s agent works exclusively for you. They help identify suitable properties, conduct due diligence, and negotiate the purchase price. This service can be beneficial in competitive markets such as Melbourne, Brisbane and Sydney, saving you time and helping you secure the best deal possible.

What the Experts Say

• Rich Harvey, Buyer’s Agent Specialist: “A buyer’s agent works solely for you, ensuring you get the best deal. They can save you time and help you avoid costly mistakes.”
• Michelle May, Property Advisor: “In a competitive market, a buyer’s agent is your secret weapon. They provide access to off-market properties and handle negotiations on your behalf.”

Conveyancer or Solicitor

Conveyancing is the legal process of transferring a property from one person to another. A conveyancer is the name of a legal expert who specialises in this process. They prepare all the documents and ensure the contract of sale meets legal requirements. They are essential when buying your first home, as they give you peace of mind knowing the paperwork is airtight.

What the Experts Say

• Paul Mulligan, Property Lawyer: “Engaging a conveyancer early ensures all legal aspects are handled smoothly. They protect your interests and manage the complex paperwork.”
• Karen Dell, Conveyancing Specialist: “A good conveyancer or solicitor can identify potential legal issues affecting your purchase. Their expertise is invaluable.”

Building and Pest Inspectors

There’s only so much you can tell about the condition of a property with your untrained eyes – you never know what creepy crawlies might be lurking beneath the surface. Before finalising the property purchase, hiring professionals to conduct building and pest inspections is a great idea. These inspections identify structural issues or pest infestations that could affect the property’s value or require costly repairs. You don’t want to move in only to find out the roof needs replacing! Professional inspectors can spot issues you overlook and prevent future headaches that could cost you a lot of money.

What the Experts Say

• Cherie Barber, Renovation Expert: “Never skip building and pest inspections. They uncover hidden issues that could cost thousands to fix after purchase.”
• Andrew Mackie-Smith, Building Inspector: “A thorough inspection provides peace of mind. It helps you make an informed decision and potentially negotiate a better price.”

The Home Buying Process: Buy Your First Home in 6 Easy Steps

Once your deposit and grants are in order, it’s time to buy your first home. There are six steps in the purchase process.

Step 1: Make Your Wish List

Determine what you need and want in a home. Consider location and proximity to public transport, schools, and amenities. Make a list of must-haves and nice-to-haves to narrow your search. This also includes the price you can afford.

Note: It’s a good idea to get pre-approval at the start so you know your budget and how much you can borrow.

Step 2: Make A Shortlist and Attend Property Inspections

Attend open houses and private inspections to get a feel for different properties. Take notes, photos and videos to compare later. Don’t hesitate to ask questions about the property’s condition, history, and recent renovations.

Step 3: Narrow It Down and Make an Offer

Now comes the exciting part. You’re finally ready to put your best offer in writing, cross your fingers, and find out whether it’ll be accepted. Make sure you:

Negotiate The Purchase Price

Work with your real estate agent or buyer’s agent to negotiate a fair purchase price. Use recent sales data and market trends to support your offer. Be prepared to walk away if the total purchase price exceeds your budget, but don’t play games if you think the full purchase price is fair and you love the house.

Understand The Pros and Cons Of A Private Treaty Vs. Auction

In a private treaty sale, you negotiate directly with the seller or their agent. In contrast, auctions involve bidding against a few auctions from other potential buyers.

Private treaty sales can take longer, but they are more relaxed and allow you to negotiate and include conditions in your offer (such as building inspections or finance approval.) Auctions can be intimidating for first-time home buyers because there is a lot of competition. However, they are faster, and you may get a good price if the competition is low.

• Phil Spencer, Property Expert: “Understand the dynamics of private treaty and auctions. Each method requires different strategies for making successful offers.”
• John Lindeman, Property Market Analyst: “Use recent sales data to support your offer. Being informed gives you an edge in negotiations.”

Step 4: Apply for Your Home Loan

You’re almost there! Submit a formal loan application to your lender. Provide all necessary documentation, including proof of income, a savings plan, and expenses. Your lender will conduct a property valuation to confirm the home is worth your price.

Step 5: Sign The Contract: Legal and Financial Steps

Contract of Sale

Review the contract of sale with your conveyancer or solicitor. Ensure all terms are clear and conditions are met, such as finance approval and satisfactory building and pest reports.

Paying the Deposit

Once your offer to buy the property is accepted, you must pay the deposit. Usually, this is 20% of the purchase price (20% means you will avoid paying LMI). Your deposit secures the property while the sale is finalised.

• Tim Lawless, Property Analyst: “Reviewing the contract of sale thoroughly is vital. Ensure all conditions are clearly understood and met before signing.”
• Andrew Mirams, Mortgage Broker: “Applying for a home loan involves detailed documentation. Ensure you have everything to avoid delays.”

Step 6: Final Inspection and Settlement

The settlement period, typically 30 to 90 days, is the time between settlement date of signing the contract and the final transfer of ownership. During this period, your conveyancer or solicitor will manage legal documents, conduct title searches, and ensure all conditions are met.

This allows you to conduct a final inspection to ensure the property is in the agreed condition. On the settlement date, your lender will transfer the remaining funds to the seller, and you’ll be ready to pick up the keys to your new home.

4 Common Mistakes to Avoid When Buying Your First Home

It’s no secret that you’ll probably make a mistake or two when buying your first home – most people do. However, these are the four common first property move mistakes you should try to avoid at all costs.

Overstretching Your Budget

Avoid the temptation to buy a property beyond your financial means. Factor in all costs, including potential interest rate rises and other ongoing costs of owning a home, to ensure you can comfortably repay your home loan. You want to enjoy your first home, not stress about it.

Skipping Inspections

Never skip building and pest inspections. Hidden issues can lead to significant repair costs and affect your property’s value. These might seem like another in a long line of additional costs involved in buying your home, but trust us – these costs are worth it for the peace of mind.

Ignoring Professional Advice

Listen to the advice of professionals, including mortgage brokers, real estate agents, accountants, and conveyancers. Their expertise can help you navigate complex situations and make informed decisions.

Failing to Plan for the Future

Consider your long-term goals when buying your first home. Are you planning to start a family in the next few years? What about a backyard for a dog? Factor in your future and make a decision that will serve you well in the coming years instead of just right now.

You’ve Bought Your First Home – What Do You Do Next?

If you’ve reached this point, congratulations! You’re ready to plan the housewarming, park the moving truck in the driveway, and move into your first home. Here are a few tips to make the transition as smooth as possible.

Home and Contents Insurance

Protect your investment with home and contents insurance. This covers damage to the property and your belongings due to events like fire, theft, or natural disasters.

• Scott Pape, Financial Advisor: “Insurance is non-negotiable. It protects your investment from unexpected events and gives you peace of mind.”

Ongoing Costs

Many people believe that once they escape the rental trap, their mortgage will be their only cost. However, homeownership comes with other ongoing payments, including council rates, land tax, utility bills, and maintenance expenses—budget for these costs to avoid financial stress.

• Jessica Irvine, Economics Writer: “Budgeting for ongoing costs is essential. To avoid financial strain, factor in all expenses, including maintenance and council rates.”

Moving In

Plan your move carefully. Book removalists, notify utility providers, and update your address with relevant institutions. Moving into your first home is a significant event, so take the time to settle in and enjoy your new space.

• Neale Whitaker, Interior Design Expert: “Planning your move well in advance can reduce stress. Organise utilities and change of address notifications early.”

Home Improvements

Consider any home improvements or renovations that can enhance your living experience and increase your property’s value. Prioritise essential repairs and gradually work on cosmetic upgrades.

• Shaynna Blaze, Interior Designer: “Prioritise essential repairs first. Gradually work on cosmetic improvements to enhance your living space.”

Your First-Home Buyer Checklist

Preparation

1. Set a Savings Goal:
   • Calculate the total amount needed for a 20% deposit.
   • Consider additional costs such as stamp duty, legal fees, and moving expenses.
   • Open a dedicated savings account to track progress.
2. Obtain Pre-Approval for a Home Loan:
   • Gather financial documents (income, expenses, and credit history).
   • Submit these documents to your chosen lender.
   • Get a clear understanding of your borrowing capacity.
3. Accumulate Genuine Savings:
   • Demonstrate your ability to save money over time.
   • Avoid relying solely on gifts from family members.

Engaging Professionals

1. Consult a Mortgage Broker:
   • Discuss your financial situation and home loan options.
   • Get help comparing lenders and securing favourable loan terms.
2. Hire a Real Estate Agent:
   • Choose an agent with local knowledge and a good reputation.
   • Utilise their expertise to find suitable properties.
3. Consider a Buyer’s Agent:
   • Engage a buyer’s agent to help identify properties, conduct due diligence, and negotiate prices.
4. Engage a Conveyancer or Solicitor:
   • Review the contract of sale and handle legal aspects of the purchase.
5. Arrange Building and Pest Inspections:
   • Schedule inspections to check for structural issues or pest infestations.

The Home Buying Process

1. Make Your Wish List:
   • List your must-haves and nice-to-haves.
   • Consider location and proximity to public transport, schools, and amenities.
2. Make A Shortlist and Attend Property Inspections:
   • Visit open houses and private inspections.
   • Take notes and photos for comparison.
3. Narrow It Down and Make an Offer:
   • Understand the differences between auctions and private treaties and decide which method suits you best.
   • Use recent sales data and market trends to support your offer.
4. Apply for Your Home Loan:
   • Provide all necessary documentation to your lender.
   • Complete the property valuation process.
5. Sign the Contract:
   • Review and sign the contract and pay your deposit.
   • Ensure all terms are clear and conditions are met.
   • Secure the property by paying the agreed deposit (usually 20%).
6. Final Inspection and Settlement:
   • Conduct the final inspection to ensure the property is in the agreed condition.
   • Your lender will settle the remaining amount owed.
   • Pick up the keys to your first home.

Avoid Common Mistakes

1. Stay Within Your Budget:
   • Ensure you can afford your home loan repayments even with potential interest rate rises.
2. Do Not Skip Inspections:
   • Always conduct building and pest inspections to avoid hidden issues.
3. Follow Professional Advice:
   • Listen to the guidance of mortgage brokers, real estate agents, accountants and conveyancers.
4. Plan for the Future:
   • Consider your long-term goals and future needs when choosing a property.

Post-Purchase Considerations

1. Arrange Home and Contents Insurance:
   • Protect your investment against damage or theft.
2. Budget for Ongoing Costs:
   • Plan for mortgage repayments, council rates, utility bills, and maintenance expenses.
3. Plan Your Move:
   • Book removalists and notify utility providers.
   • Update your address with relevant institutions.
4. Consider Home Improvements:
   • Prioritise essential repairs and plan cosmetic upgrades over time.

By following this checklist, you can confidently navigate the home-buying process and make informed decisions on your journey to home ownership.

Conclusion

Buying your first home is a complex but rewarding journey. You can achieve your dream of home ownership in Australia by understanding the steps involved, engaging the right professionals, and making informed decisions. Stay focused on your goals, be prepared for challenges, and enjoy the excitement of finding your perfect home.

Remember, preparation and knowledge are critical to a successful home-buying experience. Good luck on your home-buying journey and becoming a proud first-home buyer and owner!

Contact a professional mortgage broker.