Avoid these 5 mistakes when planning your first home purchase

Buying your first home represents one of the most significant financial decisions you'll make. For residents in Clyde and Clyde North, proper pre-purchase planning can mean the difference between securing your dream property and facing unnecessary costs or delays. Understanding what to prepare before you start house hunting will position you for success in today's property market.

Understanding Your Financial Situation

Before you begin viewing properties, conduct a thorough assessment of your financial situation. This includes:

• Calculating your current income and expenses
• Reviewing your savings for deposit and additional costs
• Checking your credit score and history
• Identifying any outstanding debts or financial commitments

Your borrowing capacity depends on multiple factors, including your income stability, existing debts, and living expenses. Lenders will scrutinise your bank statements, typically requiring three to six months of records during the application process.

Exploring First Time Home Buyer Schemes

Australia offers several first time home buyer programs designed to assist with your property purchase:

First Home Owner Grants (FHOG)
Depending on your state and the property type, you may qualify for first home owner grants. These grants can provide thousands of dollars towards your purchase, reducing the financial burden.

Home Guarantee Scheme
This government initiative allows eligible first-time buyers to purchase with as little as 5% deposit, avoiding lenders mortgage insurance (LMI) costs.

Stamp Duty Concessions
Many states offer stamp duty reductions or exemptions for first-time buyers, potentially saving tens of thousands of dollars.

Determining Your Loan Structure

When applying for a home loan, you'll encounter various options that affect your long-term financial position:

Interest Rate Types
• Variable interest rate: Fluctuates with market conditions
• Fixed interest rate: Locked rate for a specified period
• Split loans: Combination of fixed and variable portions

Additional Features
Consider whether you want an offset account, which can reduce interest payments by offsetting your loan balance with your savings.

Managing Your Loan to Value Ratio (LVR)

Your LVR represents the loan amount as a percentage of the property value. A lower LVR typically results in:

• Interest rate discounts from lenders
• Avoiding LMI costs (usually when LVR is 80% or below)
• Access to more competitive loan packages

If your deposit results in an LVR above 80%, you'll likely pay LMI, which protects the lender if you default on your loan.

The Pre-Approval Process

Getting pre-approved for your first home loan provides several benefits:

1. Clear Budget: Know exactly what loan amount you can access
2. Auction Confidence: Bid with certainty at property auctions
3. Streamlined Application Process: Faster settlement when you find your property
4. Negotiation Power: Sellers prefer buyers with finance already arranged

The pre-approval process involves submitting financial documents and having lenders assess your application before you find a property.

Working with Professional Support

Mortgage brokers can access home loan options from banks and lenders across Australia, providing you with choice and comparison opportunities. They understand the various first time home buyer schemes and can identify which programs suit your circumstances.

For Clyde and Clyde North residents, working with a local mortgage broker who understands the regional property market can provide valuable insights into local conditions and opportunities.

Planning for Additional Costs

Beyond your deposit and loan amount, factor in these additional expenses:

• Building and pest inspections
• Conveyancing or solicitor fees
• Property insurance
• Council rates and utilities connections
• Moving costs

These costs can add several thousand dollars to your property purchase, so include them in your financial planning.

Investment Property Considerations

Some first-time buyers consider purchasing an investment property first, particularly if they qualify for investment loan options with favourable terms. Investment loan applications require additional documentation and have different lending criteria compared to owner-occupier loans.

Whether you're buying your first home to live in or considering your first investment property, understanding the lending requirements and available programs will inform your decision-making process.

Pre-purchase planning sets the foundation for a successful property purchase. By understanding your financial position, exploring available schemes, and working with experienced professionals, you can approach the property market with confidence and clarity.

Call one of our team or book an appointment at a time that works for you to discuss your first home buying journey.