Everything you need to know about buying your first home

Buying your first home is exciting, but there are many elements to consider before committing.

Here’s what you need to be aware of before entering the property market.

Budgeting, qualifying and pre-approval

You need to map out a budget and be realistic about what you can afford. There are plenty of great online home loan calculators that can estimate your buying capacity and repayments.

Saving a deposit and being able to show potential lenders you can service a mortgage is vital.

It’s also important to get pre-approval, which is a document from a lender outlining how much they would lend you. This will help you find a property that is within your range.

Stamp duty

The amount of stamp duty, or land transfer duty, you pay will depend on the property’s value, the intended use, whether you are a foreign purchaser and any concessions you’re entitled to.

If you are buying or building a new home valued at up to $750,000, you may be eligible for the First Home Owners’ Grant of $10,000.

Established home buyers are no longer entitled to the grant, but may receive duty concessions. In Victoria, these include a:

• One-off duty reduction for a principal place of residence (PPR) valued up to $600,000
• Duty concession for an off-the-plan property, either as a land and building package, or as a refurbished lot
• One-off pensioner duty exemption/ concession for a new or established home valued up to $750,000
• PPR concession when a property you buy, valued up to $550,000, is intended as your primary home
• First-home owner with family exemption/concession for properties valued at $200,000 or less
• Young farmer’s exemption/concession for farmland properties.

Lenders’ mortgage insurance

Those without a 20% deposit may have to pay lender’s mortgage insurance (LMI), which protects lenders if you default on the mortgage.

This is usually a once-off cost at loan settlement that provides cover for the term of the loan.

Contract of sale and other considerations

Don’t forget to have the sales contract reviewed by a solicitor or qualified conveyancer before making an offer.

Other costs to consider include conveyancing and legal fees, pest and building inspections, loan application fees, bank valuation fees and title insurance.

It’s also worthwhile considering having the property you intend to purchase reviewed by a property expert to assess its investment potential. A builder will also be able to help you evaluate the property from a structural perspective.

These assessments will allow you to identify possible opportunities or, conversely, potential risks related to the property.

We recommend getting these property assessments done by an independent expert, rather than obtaining the opinion of a property salesperson, to ensure the evaluations are unbiased.

We’re here to help

If you’re overwhelmed, rest assured LDB can advise on all property-related matters.

LDB’s property experts can assist with a range of expertise for first-time home buyers.

To find out more, please phone (03) 9875 2900 or fill in the contact form below.