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Step-by-step guide for first home buyers: How to purchase your first property

Jessica Yun
First home buyers should start their journey with this checklist. (Source: Getty)
First home buyers should start their journey with this checklist. (Source: Getty)

First home buyers have no shortage of things to think about: budgeting, the home loan application, choosing the property itself, and the entire process of buying.

And then when all that is over, new property owners have to ensure they meet their ongoing mortgage repayments, are able to afford unexpected costs or expenses and make changes to their budget.

But it doesn’t have to be stressful: if you’re ready to step into the property market for the first time, keep your mind at ease by ticking everything off this ten-step checklist.

Here’s your ultimate guide to buying your first home, according to realestate.com.au:

1. Sort out your budget

How much can you borrow? What will your repayments look like? Use a borrowing calculator to calculate those sums. Many of the big banks and lenders have their own borrowing calculators available online, or you can use one from a comparison website such as Finder, Canstar or Mozo. Corporate regulator ASIC also has one too.

2. Research the market

Now that you have a budget, narrow your search down. What neighbourhoods best suit your price range? Make use of suburb profiles and get familiar with what’s on the market and what has recently been sold.

“This is usually the most common area people reassess their expectations; sometimes moving 5km further out could save a heap,” the report said.

3. Cut through the jargon

Making that first step on the property ladder means you have to learn the language. Familiarise yourself with relevant terms and acronyms such as LVR (loan to value ratio), LMI (lenders mortgage insurance), and P&I (principal and interest) – realestate.com.au has a handy list of property terms and acronyms.

It would also be a good idea to get your mortgage broker to guide you through the process of narrowing your options and finding the best home loan for you, according to the report.

4. Apply for conditional approval

Conditional approval means your lender has indicated you’re eligible to apply for a home loan up to a certain amount.

“You’re under no obligation to take the loan but it can show vendors you’re serious about buying and that you’re confident you can afford the property.”

It also helps you act quicker if need be, and can give you a better chance of locking down a property before someone else, the report said.

Conditional approvals are usually valid for 90 days, but you can always renew it.

5. Visit open homes and list the non-negotiables

Here’s the fun part: visiting your potential new home. Get to know your local real estate agents and get visiting. However, bear in mind that there may be no such thing as the ‘perfect’ home and that you’ll likely be making some sort of compromise, so figure out the non-negotiable features of your ideal home and find properties that tick most of those boxes.

6. Drill down

Have you found your dream home? Organise for a building and pest inspection, and get a solicitor or conveyancer to look over the contract.

“This step will help save you a lot of hassle before making an offer,” realestate.com.au advised.

Haven’t got conditional approval for your loan? Now’s a good time to apply.

7. Make the offer

If everything checks out, bid at the auction or make your offer.

If your bid or offer is accepted, you’ll have to sign the contract and pay the deposit, which is typically 10 per cent of the purchase price but can be negotiated in some instances.

8. Finalise your loan

Your lender will run last checks before giving you the ‘unconditional approval’ on your home loan. In the meantime, your solicitor or conveyancer should take care of the rest of the documentation.

9. Prepare to move in

It’s done! Get ready to move out and move in. Make the necessary arrangements, such as calling removalists or cleaners. And don’t forget to transfer your utilities (this is a great time to have a fresh look at all your utilities and see if you really are getting the best deal on your internet, energy, and water bills) and look into home and contents insurance.

10. Settlement day

“Your solicitor or conveyancer will arrange settlement with the vendor’s solicitor or conveyancer,” said the report. This will normally happens between a month and three months after the sale. You generally don’t have to be at the settlement.

This day is also when your lender provides your finance, and when your mortgage repayments kick in.

If you made it through all of that, congratulations: you’re now a home owner.

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