Buying a house is one of the biggest single investments you will ever make. Owning a home provides stability over renting and gives you the freedom to create a sanctuary that you can create on your own terms.
The process of buying a home can be overwhelming, especially if you’re a first home buyer, as you’re navigating the loan process, going to open houses to find your dream home and once you’ve found a property, you may have to negotiate on the purchase price or bid at auction.
Understanding the process and preparing well ahead of time can make the journey to home ownership far more successful.
Here’s what you need to know
Before you even start looking at properties, the most crucial step is understanding your financial situation.
Review your budget – consider your income, savings, any existing debts and monthly expenses.
Creating a budget spreadsheet or using an app can help you to determine where your money is going and if you need to make some adjustments to your current spending to start saving a little extra.
Your credit score also plays a major role when it comes to applying for a loan. If you have a low credit rating, this can affect how much you can borrow. You can check your credit score for free through websites like Finder or Canstar.
Getting pre-approval – once your finances are in order, securing pre-approval for your mortgage should be your next move.
You’ll then need to determine how much you can afford to borrow. The amount you can borrow will be based on your income, expenses, and the amount you have saved for a deposit. When applying for a loan, a general rule of thumb is that the repayments shouldn’t exceed 30 per cent of your after-tax income.
Typically, if you have less than 20 per cent deposit, you may have to pay Lender’s Mortgage Insurance (LMI), which protects the lender if you are unable to make repayments.
Government grants are available and designed for first home buyers and those re-entering the property market. The 5% Deposit Scheme was recently expanded to help those with less than 20 per cent deposit and the Help to Buy Scheme is a new scheme that helps bridge the gap of home ownership with shared equity from the government.
Let the house hunting begin – having pre-approval can give you the confidence to look for a property knowing your finances are in order and what your budget is.
Think about what matters most to you when looking for a property. The location, school district, commute to work, and number of bedrooms all need to be factored in. You might realise that living in the city is no longer an option and you may need to look a little further afield.
Make a list of non-negotiables. Set out the criteria of what your ‘must haves’ are and what some of the things that are ‘nice to have’ but you can live without. These things can help your real estate or buyer’s agent when looking for properties.
You’ve found the one! – once you’ve found a property and made an offer, it’s so important to put all of the checks in place before you sign on the dotted line. While it is easy to become emotionally attached to a property, getting the right inspections done is a worthwhile investment. A building and pest inspection will determine whether the property has potential issues from minor repairs to major structural damage – this can save you thousands down the track – and in some cases, you may need to walk away if there are too many issues.
Don’t forget the furniture – while we typically focus on getting our finances in order to buy a property, you need to remember that you will need to furnish it too, which can cost thousands, so factor this is too.
Planning to create memories
Buying a house takes patience, research, and financial planning, but the reward is a place to call home – a foundation for building a life, creating memories, and securing long-term stability. With preparation and the right support, the process becomes not only manageable but exciting, turning a complex transaction into a meaningful step toward your future.
