Tips you need to know when buying your first home


There are few things more exciting than buying your first home. But, unfortunately, home buying is neither a speedy nor a simple process. 

The property buying process is often challenging to navigate, especially if you have no prior experience with real estate. So, if you’ve started saving or even if you’ve already begun house hunting, chances are you’ll need some guidance. 

This home buying guide will walk you through each step. From building up your deposit to organising the building inspection and, finally, signing the contracts, you’ll have all your questions answered. 

With that in mind, let’s get to the following commonly asked questions:

  • What do you need to buy a house?
  • What are the steps to buying a house?
  • How much money do you need to buy a house?
  • What upfront costs are involved in buying your first home?
  • What ongoing costs are involved in buying your first home?
  • What are the best home loans? 
  • How can you budget for your first home?
  • What happens when you find your dream home?

Q1. What do you need to buy a house? 

To an extent, buying a house is more about who you need than what you need. For example, you will find it harder to secure your dream home without a real estate agent and mortgage broker. 

Each will help you to navigate complex parts of the house buying process. Ultimately, they’ll get you ready to buy a house you love without overstretching yourself financially. 

Say, for example, you’re unsure how much you’ll need for a home deposit. Or you don’t know what loan options are available to you. It is far easier to overcome these obstacles with the right team on board. 

Q2. What are the steps to buying a house? 

There are several steps involved in the house buying process, and they are generally the same regardless of who the home buyer is and what they want. However, there is no strict timeline, and what it takes to buy a house is different for everyone. 

These steps include:

  • Finding your ideal home.  
  • Shopping around for a government home owners grant. 
  • Looking through loan options and getting approval. 
  • Awaiting the outcome of the property valuation. 
  • Getting the property surveyed and a building and pest inspection done. 
  • Making an offer. 
  • Signing the contract. 
  • Arranging conveyancing.

Each step will require patience and level-headedness. It’s all too easy to get excited and carried away when buying your first home. Just remember that as much as anything else, it is an investment. 

The good news is that good real estate agents will be there from the beginning. They will help you to make clear-minded choices that benefit you in the long term. 

Q3. How much money do you need to buy a house? 

Property prices in Australia depend on several factors, such as property size, location, and age. Things like Reserve Bank financial policy and property market performance also play a crucial role. 

So, there’s no way of predicting precisely how much you’ll need for your dream property. However, chances are you’ll secure the one you want with a house deposit. 

Ideally, you should save for a deposit that is 20% of the property’s purchase price. Depending on your financial situation and what you can afford to borrow, the deposit you save for could be higher or lower. 

There are other costs of buying a house you should know. These include mortgage repayments and other regular outgoings like home and contents insurance. 

Important: See below for more information on the added costs. You’ll need to factor these into your budgeting, too. 

Q4. What upfront costs are involved in buying your first house? 

It’s essential to be realistic throughout the house buying process, especially regarding buying costs. 

Many aspiring homeowners end up parting with more money than they initially budgeted for, and to avoid falling into the same trap, and you need to be prepared to foot the bill for the following: 

  • Estate agent and broker fees: Firstly, there’s the estate agent and broker fees. Then, on top of the price of your deposit, you need to pay your lender a loan application fee. The cost will vary depending on the provider
  • Lender’s Mortgage Insurance (LMI): If your deposit is less than 20% of the property’s purchase price, you may also need to take out lender’s mortgage insurance, which is a one-off payment that protects your lender.
  • Legal and conveyancing fees: Once you’ve sorted out your loan, don’t forget about legal and conveyancing fees, inspection fees, and moving costs. Government fees will apply as well, which you’ll learn more about below. 

Note: If you’re feeling overwhelmed by the list of associated costs, try not to worry too much. You may be able to apply for a First Home Owners Grant. And, there’s always the option of seeking out financial advice if you need some extra guidance. 

Stamp duty fees for first time buyers 

One of the highest additional costs for buying property is a government fee known as stamp duty

The exact price will depend on the policy in place in your state or territory, and the cost of your property can generally amount to tens of thousands of dollars.

The good news is that some regions have exemptions in place for first-time buyers. So, if you’re buying your first home, you might qualify for a total exemption or reduced rate.

If you don’t, it’s worth using a stamp duty calculator to determine how much you might have to pay. 

Q5. What ongoing costs are involved in buying your first house? 

Once you’ve paid the upfront costs, there are ongoing costs you’ll need to keep on top of, such as loan repayments, unless you were able to buy your new home outright. 

On top of your monthly repayments, you will also have to pay interest on the loan. Different loans offer different interest rates, which you’ll find out more about shortly. 

Additional expenses include your insurance payments, for example, home and contents insurance and mortgage insurance. And, don’t forget about council tax, utility bills, and renovation costs. 

Q6. What are the best home loans? 

You need to find a home loan that works for your financial situation. You can pick between fixed and variable rate loans, both of which have their pros and cons. Before you put in a loan application, ensure you understand the difference. 

In addition, some loans are more flexible than others and allow you to make extra repayments. However, your borrowing power will determine what type of loan you can get and with which providers. 

Fixed rate home loans 

With fixed-rate home loans, the interest rate does not change. So, it remains at the current market interest rate until you pay the loan off. 

The upside to fixed-rate loans is that you know the exact rate, and the downside is that, once you get your loan approval, you might find yourself stuck with an unfavourable interest rate. 

Variable rate home loans

The interest charged on a variable rate home loan will change alongside changes in the market. So, your monthly repayments will reflect when rates are high or low. 

Over time, you’re likely to pay less with a variable rate home loan. However, that’s never guaranteed. 

Note: If you’re unsure which is the right option for you, seek the help of financial advisers. 

Q7. How can you budget for your first house? 

One of the most complex parts of making your first home purchase is the budgeting that comes beforehand. Remember that there will be extra costs to cover on top of your deposit and loan repayments. So, while challenging, you do need to save money. 

The good news is that it’s entirely possible to save for a house, even on a low income. The best way to start is to set savings goals for each month and work your budget around them. 

If you’re serious about becoming a first home buyer, you could also:

  • Cut out unnecessary purchases. 
  • Evaluate your outgoings. 
  • Make the most of loyalty schemes and benefits. 
  • Pay off debts ASAP. 
  • Start a side hustle. 

Q8. What happens when you find your dream home? 

Hopefully, you won’t have to house hunt for too long to find your ideal property. Then, once you do, you should have a good grasp of the process that follows. 

For starters, you need to decide whether you want to buy at auction or privately. If you buy at auction, you’ll have to pay a portion of the deposit straight away, and it’s also far harder to back out if you change your mind. 

Then, get a professional to carry out a building and pest inspection before creating the contract. If everything is in order, you should be just about ready to sign. 

Important: Before you sign any legally binding documentation, ask a solicitor or conveyancer to review it. You might end up agreeing to unfavourable terms if you don’t. 

In summary

Before you buy your home, the process can look like an overwhelming frenzy of home loan applications and mounting costs. But, with a guide to help you and some financial assistance, the process should go smoothly. 

And then, who knows? A few years down the line, you might even be ready to buy your first investment property, too. 

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Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs, or financial situation.

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