The 12 steps to buying your first own home

Buying your first home is exciting, but it can also be confusing and, at times, a little overwhelming.

There is finance to arrange, government assistance to investigate, suburbs to compare, contracts to understand and negotiations to navigate, often while property prices and lending conditions are changing around you.

The good news is that you don’t need to understand everything at once.

If you follow a logical process, surround yourself with the right professionals and avoid making emotional decisions, buying your first home becomes much more manageable

Here are 12 basic steps:

1. Understand your financial position

Before looking at properties, work out where you stand financially.

Start with your income, savings, existing debts and regular living expenses, and be honest about how much you can comfortably afford to spend each month.

Your lender may be prepared to lend you more than you should sensibly borrow. There is a significant difference between your maximum borrowing capacity and a repayment you can comfortably manage while continuing to enjoy your life.

It is also worth calculating what your repayments would look like if interest rates rose or your circumstances changed.

A home loan usually lasts for decades, and during that time you may change jobs, start a family or experience periods when your income is lower.

Check your credit report for errors or missed payments before applying for finance. Your repayment history, credit card limits, personal loans and buy now, pay later accounts can all affect how a lender assesses your application.

2. Reduce expensive debts and unnecessary credit limits

Personal loans, car finance and credit card debt can substantially reduce the amount a lender is willing to offer you.

Even an unused credit card can affect your borrowing capacity because lenders generally consider the total credit limit available to you, rather than simply the amount you currently owe.

This means reducing consumer debt and closing unnecessary credit facilities may improve your position.

However, don’t automatically use every dollar of your savings to clear debt.

You will still need money for your deposit, purchasing expenses and an emergency buffer, so discuss the best approach with a finance professional.

3. Investigate first-home buyer assistance

First-home buyers may have access to several forms of assistance, but eligibility rules and property price limits apply.

Under the Australian Government 5% Deposit Scheme, eligible first-home buyers may be able to purchase with a deposit of at least 5% without paying lenders mortgage insurance.

Eligible single parents or legal guardians may be able to purchase with a deposit of at least 2%.

The government guarantees part of the loan, but the buyer remains responsible for the mortgage and all repayments. But remember...buying with a smaller deposit also means taking on a larger loan, so affordability still matters.

The First Home Super Saver Scheme may allow eligible buyers to withdraw certain voluntary super contributions to help fund a deposit.

There are also state and territory grants, stamp duty exemptions and concessions, but these differ considerably depending on where you buy, the value of the property and whether it is new or established.

Check the current rules before setting your budget because these schemes change over time, and a property that sits just above a price threshold could cost you considerably more.

4. Speak with a mortgage broker or lender

A good mortgage broker can explain how different lenders will assess your circumstances and help you compare loan options.

The interest rate matters, but it should not be the only consideration. Loan flexibility, offset accounts, redraw facilities, fees and the ability to make additional repayments can also make a meaningful difference over the life of the mortgage.

Once you understand your borrowing position, consider obtaining loan pre-approval.

Pre-approval helps establish a realistic price range and demonstrates to selling agents that you are a serious buyer.

However, it usually remains conditional on the lender confirming your circumstances, valuing the property and deciding that the property is acceptable security.

Pre-approval also has an expiry date, commonly within three to six months, so it may need to be renewed if your property search takes longer than expected.

5. Prepare for all the purchasing and ownership costs

The deposit is only one part of the money you will need.

Depending on where and what you buy, your upfront costs may include:

• Stamp duty or transfer duty
• Conveyancing or legal fees
• Building and pest inspections
• Strata report fees
• Loan application or valuation fees
• Lenders mortgage insurance, where applicable
• Buyer’s agent fees
• Moving and connection costs
• Immediate repairs, furnishings or renovations

Stamp duty concessions mean some first-home buyers will pay much less than others, so the old rule of simply adding a fixed percentage to the purchase price is not particularly helpful.

Obtain estimates based on the property price and the state or territory in which you plan to buy.

You should also allow for ongoing expenses such as council rates, strata levies, insurance, maintenance and higher utility costs.

Keep a financial buffer after settlement. Moving into your new home with no savings left can turn a minor repair or unexpected bill into a major financial problem.

6. Decide what you really need

Now you can begin thinking about the type of home you want to buy.

Separate your requirements into must-haves and preferences. Your must-haves might include access to public transport, a particular school zone, space to work from home or an acceptable commuting time.

Your preferences could include an extra bedroom, a renovated kitchen or a larger garden.

Think about how the home will suit you over the next five to seven years rather than trying to buy for every possible future circumstance. Your first home is unlikely to be your last home.

7. Choose your location carefully

A home is somewhere to live, but it is also likely to become one of your largest financial assets.

Look beyond the appearance of individual properties and consider the neighbourhood’s long-term appeal. Access to employment, public transport, shops, schools, parks and lifestyle amenities will influence both your enjoyment of the home and its future resale value.

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Spend time in the area at different times of the day and on weekends. A quiet street during a weekday inspection may be affected by traffic, nightlife, school congestion or aircraft noise at other times.

Also investigate planning changes, proposed developments, flood and bushfire risks, insurance availability and any infrastructure projects that may affect the area.

Sometimes a well-located apartment, villa or townhouse will provide a better first step than a detached house much further from employment and amenities.

8. Learn how the local property market works

Online property portals are a useful starting point, but asking prices don't necessarily tell you what homes are really worth.

Follow properties from their initial listing through to their eventual sale. Attend open homes and auctions, speak with local agents and keep a record of comparable sales.

Make sure your comparisons are genuinely comparable. Two homes in the same suburb can have very different values because of their street, land size, condition, orientation, floor plan or proximity to busy roads.

Automated online valuations can also be misleading because they cannot fully account for the condition and individual characteristics of a property.

The more properties you inspect, the easier it becomes to recognise value and avoid paying too much because you have become emotionally attached.

9. Consider using a buyer’s agent

The selling agent is employed and paid by the vendor, which means their legal responsibility is to obtain the best outcome for the seller.

A qualified buyer’s agent represents the buyer and will help with suburb selection, sourcing properties, assessing value and negotiating the purchase.

This can be particularly useful if you are time-poor, buying in an unfamiliar market or uncomfortable negotiating against experienced selling agents.

The seller has an agent representing them; shouldn't you? At Metropole, our buyer's agents have no properties to sell. We work for one person - you.

The selling agent is legally working for the vendor, and knows at least five things about that property they don't want you to know. We put an experienced professional on your side of the table.

We are proudly independent, paid by you and never by the sellers or developers.

Why not click here and organise a time for a chat to learn how we can help you buy your home?

10. Complete your due diligence

Finding a property you love is the point at which clear thinking becomes particularly important.

Have the contract of sale reviewed by a solicitor or conveyancer before signing it or bidding at auction. The contract may contain restrictions, easements, settlement conditions or other matters that affect the property’s use and value.

For houses, arrange an independent building and pest inspection. For apartments, villas and townhouses, review the owners corporation or body corporate records, including meeting minutes, insurance, planned works, defects, disputes, special levies and the balance of the sinking or capital works fund.

Check council and planning records, title boundaries and whether previous renovations or additions received the required approvals.

You should also obtain an insurance quote before committing to the property. Insurance costs can vary considerably in areas exposed to floods, bushfires, storms or coastal risks, and in some locations suitable cover may be difficult to obtain.

If you are buying at auction, all these checks generally need to be completed before auction day because the contract will usually become unconditional when the hammer falls.

11. Make an offer and negotiate carefully

Before making an offer, decide what the property is worth to you and establish your absolute limit.

Base that figure on recent comparable sales, the condition of the property and the competition from other buyers.

The advertised price is part of the selling campaign and should not automatically become your valuation.

In a softer or slower market like we are currently experiencing, buyers may have more time to conduct due diligence and negotiate on price or settlement terms.

However, well-located homes with broad owner-occupier appeal can still attract strong competition even when the wider market is subdued.

Conditions can also vary considerably between suburbs and price brackets, so avoid assuming every vendor will accept a large discount.

If necessary, make your offer subject to finance, an acceptable building and pest inspection and legal review. The rules surrounding cooling-off periods and conditional contracts vary across Australia, so obtain legal advice before signing anything.

An unconditional offer may appear attractive to a vendor, but it can expose a first-home buyer to serious financial consequences if finance is declined or problems with the property are discovered later.

12. Prepare for settlement and homeownership

Once your offer has been accepted and the contract has become unconditional, your conveyancer or solicitor will coordinate the settlement process with your lender and the seller’s representative.

Arrange a pre-settlement inspection shortly before settlement to confirm that the property remains in the agreed condition, inclusions have not been removed, and any required repairs have been completed.

Make sure the appropriate building insurance is in place from the date required in your state or under the contract.

The point at which risk transfers from the seller to the buyer differs around Australia, so confirm this with your legal adviser.

You will also need to arrange utilities, update your address, prepare for moving day and revise your household budget to include mortgage repayments and ownership costs.

After settlement, avoid the temptation to immediately spend heavily on furniture and renovations. Give yourself time to understand how you use the property and rebuild your financial buffer.

A final word

Buying your first home involves a series of financial, legal and emotional decisions, and it is easy to feel pressured when you find a property you like.

However, there will always be another property. Stay patient, keep your budget in mind, and rely on independent professional advice rather than letting the selling process rush you into a decision you may later regret.

The aim is to buy a home you can comfortably afford, in a location that suits your lifestyle and has the underlying qualities that will continue to appeal to future buyers.

Metropole’s Home Buyers division helps buyers create a clear brief, identify suitable locations, assess properties and negotiate with the selling agent.

Having an experienced professional on your side can help you avoid expensive mistakes and buy your new home with greater confidence.

Why not click here and organise a time for a chat to learn how we can help you buy y