Buying New Homes: Tips for First-time Home Buyers in Australia

Buying New Homes: Tips for First-time Home Buyers in Australia

Buying a home is an important financial decision that most people make in life. A short learning curve covering topics like real estate in Australia, how to buy land in Australia, buying a house in Melbourne, etc is the first step towards owning your dream home. As you move forward with your aspiration, this learning curve will form the cornerstone of all your actions till the golden day when you enter your dream home and start living there. We have culled out some important tips and pointers to help you along the way and avoid potential mistakes. Understand your upfront costs.

When you have decided to buy real estate in Australia or are focused on buying a house in Melbourne, there are a few do’s and dont’s you need to keep in mind. Apart from that,  there are some essential upfront costs like a deposit of about 20% of your purchase price as additional collateral to avail a loan, fee for your loan application, mortgage insurance, government fees, conveyancing, and legal fees, moving costs, pests and strata inspection fees, etc. It helps to cumulate all these upfront costs and ensure that you are ready with the necessary financial means before moving forward. 

Ongoing Expenses

If you have an ongoing mortgage or other debts, consider how you will service those debts once the repayments against any loan for your new home starts. Also, ensure that you have done enough homework on variable and fixed interest or a combination of both before you make a loan application. Understand that a fraction of a percentage can make a significant impact on the amount of money you end up paying across the tenure of the loan/mortgage. Other expenses of an ongoing nature will include utility costs, council rates, strata fee where applicable, insurance cost for the building and your possessions in the home, and home improvement costs.


First Home Owner Grant

Australian citizens are eligible for a grant known as the first home owner grant, subject to certain conditions. These conditions include the age of the applicant which should be a minimum of 18 years, be a citizen of Australia or be a permanent resident ( or apply along with a permanent resident), and that the applicant or his/her spouse has not owned and lived in Australian property in the past. These conditions further state that the applicant should be buying a brand new home or building with the intention to move in within 1 year of completing the transaction and live there for a continuous period of at least 6 months making it his/her principal residence. You should also check out the latest amendments to the scheme so that you get the maximum benefit from the scheme.

Your Credit Report

When you make a loan application for your dream home, you will obtain and submit an updated credit report as part of the loan documentation. Your lender will microscopically evaluate the report to understand your debt servicing behaviour, defaults if any, missed payments, your earnings from salaries/wages or other sources, and generally speaking, your creditworthiness in general. When your credit report has question marks on it, most lenders may not approve your home loan.

Understand Your Mortgage Payments

Generally, most Australian lenders offer 25 to 30 years as the loan tenure. Therefore, you should factor in your current income and the projected income, perhaps including that of your spouse/partner to understand how you will discharge your mortgage obligations once you have signed on the dotted lines of the loan document. Remember that you will have other financial commitments too once the EMIs kick in and you should be able to balance the act.  

Understand the Market Conditions

Before you start scouting for your dream house, it is essential that you have a good understanding of the current market conditions. Home prices tend to fluctuate wildly influenced by several factors. In the second half of 2021 for instance, Australia is experiencing a real estate boom and this can be a good reason for aspiring buyers to put things on the back burner temporarily and wait for the market to cool down a bit. Yet, a final call will be driven by individual perceptions, an urgency to own a home, convincing arguments to buy a particular home or similar inputs. Remember that you have all the time at your disposal before you put your signature on the dotted lines. 


Shop around Extensively for your Home Loan

Once the news that you are looking for a home loan is out in the market, many smart marketers will make juicy offers. But the onus of examining each offer threadbare before arriving at a decision is on you. As of the second half of 2021, most home loans in Australia hover around the 2% interest mark. Understand the difference between a fixed-rate loan and a variable rate loan knowing that even a tiny difference of 0.25% can translate to a tidy sum across the loan tenure. 


To learn more about buying new homes in Australia, please get in touch with us.