Buying your first home is a huge milestone, but let’s be real, it can also feel pretty overwhelming. With so much to think about, from saving for a deposit to getting a home loan and covering extra costs, it is easy to feel lost in the process.
The good news? Unconditional Finance is here to help make the home-buying process simpler and less overwhelming. Many first-home buyers feel uncertain about where to start, but with the right guidance, breaking it down into clear steps can make all the difference. Whether you are looking for a city apartment, a house in the suburbs, or something by the beach, being prepared and knowing what to expect will help you move forward with confidence.
This guide outlines the essential steps to buying your first home, from managing your finances to receiving the keys to your new home. Let’s get started!
Step 1: Assess Your Financial Readiness
Before entering the property market, it’s important to assess your financial situation and estimate your borrowing capacity to make informed decisions. This step involves:
Evaluating Your Savings
A home loan deposit is a key factor in securing a mortgage. While a 20% deposit is ideal, some lenders accept 5–10% with Lender’s Mortgage Insurance (LMI). A larger deposit can help reduce repayments and interest costs.
Understanding Your Borrowing Capacity
Lenders assess your income, expenses, credit history, and existing debts to determine how much you may borrow. Using online mortgage calculators can provide an estimate of loan repayments. Having a good credit score and a stable financial history can improve your loan approval chances.
Considering Upfront Costs
In addition to the deposit, several other costs come with purchasing a home, all of which can affect your overall budget. These upfront expenses include:
- Stamp duty (varies by state, with concessions for first-home buyers).
- Legal and conveyancing fees (for handling the property transfer).
- Building and pest inspections (to uncover any potential issues before buying).
- Mortgage registration and loan application fees (charged by lenders to process your loan).
Step 2: Research First-Home Buyer Incentives
To support first-home buyers, the Australian Government and state governments offer various incentives that could reduce upfront costs. Some key programs include:
- First Home Owner Grant (FHOG) – A one-time grant (typically $10,000–$20,000) available for eligible buyers purchasing a new home or building a property.
- First Home Guarantee– Enables eligible buyers to buy a home with a deposit as low as 5% while potentially avoiding Lender’s Mortgage Insurance (LMI).
- First Home Super Saver Scheme– Enables buyers to use voluntary super contributions (up to $50,000) for a home deposit, potentially benefiting from tax advantages.
- Many states provide full or partial stamp duty concessions for first-home buyers whose property value falls below a specific threshold.
Checking eligibility and understanding how these incentives apply to your situation could make homeownership more accessible, as details and requirements vary by state and may change over time.
Step 3: Secure Pre-Approval for Your Home Loan
Securing a home loan pre-approval can help you understand your borrowing capacity and put you in a stronger position when making an offer. Pre-approval involves:
- Comparing different lenders and loan products, including fixed vs. variable rates and features like offset accounts and redraw facilities.
- Engaging a mortgage broker to help explore loan options and find a suitable lender.
- Providing necessary documents, including proof of income, tax returns, bank statements, and credit history.
Pre-approval does not guarantee a final loan but may give you greater confidence when searching for properties. It typically lasts for 3–6 months, so it’s best to apply when you are actively looking.
Not sure which home loan is right for you? Let our expert mortgage brokers help you compare options, secure pre-approval, and get one step closer to owning your first home. Contact us today to get started!
Step 4: Start Your Property Search
When searching for your first home, it is important to consider several key factors that go beyond just the price. The type of property, its location, and the surrounding amenities can all influence your lifestyle and the long-term value of your investment. Taking the time to evaluate these aspects can help you make a well-informed decision:
Property Type
Are you looking for a house, apartment, townhouse, or new build? Each option has its advantages and trade-offs. Houses often offer more space and land, while apartments can be lower maintenance and more affordable. Townhouses provide a balance between the two, and new builds may come with government incentives but could involve construction delays. Understanding what best suits your needs can help narrow your search.
Location and Growth Potential
Choosing the right suburb or neighbourhood is crucial. Research median house prices, rental yields, and local property trends to assess whether the area aligns with your budget and future plans. Look into factors like infrastructure projects, planned developments, and economic growth, as these can influence property values over time.
Lifestyle Factors
Your home’s location impacts daily life and resale potential. Consider proximity to public transport, schools, employment hubs, shopping centres, and parks. A convenient and well-connected area may enhance your living experience while also making the property more attractive to future buyers.
Use real estate platforms to compare properties, track market trends, and set up alerts for new listings. Attending open homes and auctions can provide valuable insights into pricing dynamics, demand, and negotiation opportunities. Speaking with local real estate agents may also give you an edge in finding the right home before it hits the market.
Step 5: Make an Offer or Participate in an Auction
Once you find the right property, the next step is securing it. Whether buying through a private sale or at an auction, understanding the process can help you make confident decisions.
Making an Offer (Private Sale)
In a private sale, you submit an offer through the real estate agent, negotiating key terms such as price, deposit amount, and settlement period, which usually ranges from 30 to 90 days. You may also include conditions like finance approval or building inspections. A well-structured offer that aligns with the seller’s expectations can improve your chances of acceptance.
Bidding at Auction
Auctions are fast-paced, and winning bids are legally binding with no cooling-off period. Setting a strict budget, securing pre-approval, and being ready to pay an immediate deposit is essential. Attending auctions beforehand can help you understand bidding strategies.
Reviewing the Contract of Sale
Before signing, it’s important to have a conveyancer or solicitor review the contract of sale to ensure there are no hidden clauses or risks. If your offer is accepted or you win at auction, you will need to pay a holding deposit and work with your lender to finalise the loan. Preparing for settlement with professional guidance can help ensure a smooth transition to homeownership.
Making an offer or bidding at auction is an important stage in buying your first home. Taking the time to prepare, understand your financial limits, and seek expert advice can help you approach this step with confidence. With careful planning, you can move forward knowing you are making a well-informed decision on your journey to homeownership.
Step 6: Conduct Due Diligence Before Purchase
Before committing to a property, it’s essential to conduct thorough due diligence to avoid unexpected issues that may result in costly repairs or legal complications. Taking the time to investigate potential risks may help you make a more informed decision and safeguard your investment over time. Important considerations include:
- Building and pest inspections – Identify structural issues, termites, or water damage that might impact the property’s value.
- Strata report (for apartments and townhouses) – Review financial records, ongoing fees, and any planned major repairs.
- Zoning laws and council checks – Ensure the property aligns with future development plans or restrictions.
Skipping due diligence could result in unexpected costs or challenges in the future. A property that seems perfect on the surface could have underlying issues that affect its value, safety, or livability.
Step 7: Secure Your Home Loan and Finalise the Contract
After signing the contract, the next step is finalising your home loan and preparing for settlement. This involves confirming formal loan approval and reviewing your repayment schedule to ensure it aligns with your financial plan.
At this stage, working closely with your conveyancer or solicitor is essential to ensure all legal aspects are covered, and there are no unexpected issues. You will also need to pay the deposit, which is usually ten per cent of the property’s price, and ensure that all settlement deadlines are met.
Most settlements take between four to six weeks, during which your lender, legal representative, and the seller’s agent work together to facilitate the transfer of ownership. Staying organised and maintaining communication with your legal and financial representatives can help ensure a smooth and timely settlement process.
Step 8: Settlement and Moving In
Settlement day marks the official transfer of ownership, and you finally receive the keys to your new home. Once the paperwork is completed and funds are exchanged, the next steps involve handling a few essentials to ensure a smooth transition.
Registering with the local council, updating utility providers, and arranging home insurance are important tasks to complete early on. Securing the property by changing locks provides peace of mind, ensuring that only you have access to your new home.
Organising removalists and setting up essential services such as electricity, water, and internet will help make the move-in process more seamless. With everything in place, you can settle in, personalise your space, and start enjoying the excitement of homeownership.
Step 9: Managing Your Mortgage and Homeownership
Owning a home comes with ongoing financial commitments that require careful planning. Keeping up with mortgage repayments is important, and setting up automatic payments could help you stay on track. Alongside your loan, budgeting for expenses such as council rates, strata fees (if applicable), and general maintenance costs will help you manage homeownership without financial strain.
As interest rates fluctuate, exploring refinancing options in the future may allow you to secure a better deal or adjust your loan to suit your financial goals. Over time, as you pay down your mortgage, you may also build equity in your property. This could open opportunities for future investments, renovations, or even upgrading to a new home.
Being proactive with your finances can help you manage homeownership more effectively and plan for long-term financial stability.
Take the Next Step Toward Owning Your First Home
Purchasing your first home requires careful planning, financial preparation, and market research. By understanding each step, from budgeting to settlement, you can approach the process with greater confidence and make informed decisions.
However, it is important to remember that the steps presented in this article serve as a general guide, and the actual home-buying journey can vary based on factors like your financial situation, lender criteria, and market conditions.
Government incentives, loan options, and market trends may change over time, so staying informed and seeking professional advice can help you make well-rounded decisions. Unconditional Finance is here to provide the support you need, helping you stay informed and take proactive steps toward making homeownership a reality sooner than you think.
If you’re considering buying your first home, now could be a great time to start researching your financing options and exploring the property market. Contact our expert mortgage brokers in Sydney today to discuss loan options and find the right solution for your home-buying journey.
Frequently Asked Questions
Both options have advantages. New builds may come with government grants and lower maintenance costs, while existing homes can offer more character and established neighbourhoods. The right choice will depend on your finances, personal priorities, and long-term goals.
LMI is a one-time fee charged when your deposit is less than 20% of the property’s value. It covers the lender if the borrower defaults on the loan but does not directly benefit the borrower. Some first-home buyer schemes, like the First Home Guarantee (FHG), allow eligible buyers to avoid LMI with as little as a 5% deposit.
Beyond having a deposit saved, being financially ready means having a stable income, a good credit score, and manageable debt levels. Lenders assess your borrowing capacity based on these factors, so reviewing your financial situation thoroughly is essential before applying for a home loan.
If your loan application is declined, it’s important to understand why. Common reasons include low credit scores, insufficient income, or high debt levels. Improving your credit history, reducing outstanding debt, or exploring lenders with more flexible criteria may increase your chances of approval in the future.
Yes, guarantor loans allow a parent or close relative to use their property as security for part of your loan. This can help you avoid Lender’s Mortgage Insurance (LMI) and increase borrowing capacity, but it also means the guarantor takes on financial risk if you are unable to meet repayments.
