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Savvy first home buyer’s affordability checklist

Savvy first home buyer's checklist. Source: Getty

Buying your first home is exciting and feels like a right of passage to adulting. Sadly though, too many Australians overspend, which turns their homeownership dream into a nightmare of persistent stress.

In fact, over half of ‘young growing families’ are experiencing mortgage stress – and that was before COVID-19. (Source: Digital Finance Analytics, February 2020).

It is essential to get your affordability calculations right because it is a costly decision to correct by downgrading.

Use this checklist to be a money-savvy home buyer and avoid mortgage stress.


I have:

  • 20% deposit saved (so I can avoid lender’s mortgage insurance)

  • Extra 5% saved for transaction and set-up costs (stamp duty, moving, furniture)

  • Proven I can afford the repayments by saving at the same rate as my loan repayment may be.

  • Home building insurance budgeted for

  • Extra emergency savings (at least three months’ living costs)


I have budgeted for:

  • (Couples) Affording repayments on a lower income while raising a family

  • Ongoing building maintenance to keep my house fresh, inside and outside. (Allow at least 2.5% of the building cost per year. )

  • Income protection insurance to cover my living costs if I am seriously ill or injured.


The hidden cause of housing-related stress is not being able to afford important life experiences because you overspent on your home. Be a money-savvy home buyer and cater for these items.

I have budgeted for:

  • Predictable expenses like replacing my lifestyle items without borrowing. e.g. Contents and vehicles

  • My other life ambitions (e.g. wedding, holidays, family, education, and self-employment).

  • Affording repayments if interest rates increase up to 2% during my loan term

You may be thinking, how many people actually do that? Not enough – that’s why one-third of all homeowners are in mortgage stress. (Source: DFA)

If you want your financial situation to be strong, not stressed then be savvy!

Matt Hern CFP® is a Money Coach who specialises in helping you spend smarter, save more and afford the life you'd love.

Yahoo Finance Breakfast Club episode 7.

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