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Home Buying Simplified: A First-Time Buyer’s Essential Guide

23 January 2024

Table of Contents

Purchasing your first home is an exciting milestone, and we understand that the process can feel overwhelming at times. In this guide, designed especially for Australian first home buyers, we will break down the complexities of buying a home into simple, actionable steps, empowering you to make informed decisions with confidence.

To help you get the most out of your purchase, let’s dive in and make your dream of owning a home a reality.

 

Key Takeaways

  • A first-time home buyer is someone purchasing a home for the first time, usually meaning they have never owned a residential property before or haven’t owned one within a specific period.
  • Important factors to consider before buying a home include assessing your budget, understanding the costs involved, determining the deposit needed for a mortgage, and shopping for your dream home.
  • Experts predict that housing prices in Australia will likely stabilise and experience more moderate growth in 2024.
  • Government schemes and incentives available for first home buyers in 2024 include the Home Guarantee Scheme (FHBG, RFHBG, FHG), the First Home Super Saver Scheme (FHSSS), and the First Home Owner Grant (FHOG), and homeowners can benefit from it.

must know guide for first time home owners

First Time Home Buyer and the Benefits

A ‘first-time home buyer’ often refers to an individual or household that is purchasing a home for the first time. This term typically applies to individuals who have never owned a residential property before or who have not owned a home within a specific period, as defined by local regulations or lending institutions.

First-time home buyers often benefit from various incentives, programs, and resources aimed at assisting them in the home-buying process. These initiatives can include first-home owner grants, government subsidies, tax credits, down payment assistance, and educational resources tailored to their specific needs and circumstances. The goal is to support and encourage individuals who are entering the housing market for the first time and help them achieve their dream of homeownership. Let Dhursan Construction provide personalised guidance and help you simplify your first-ever home buying experience!

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Consider the following before you buy

Before taking the exciting leap into homeownership, it’s crucial to consider a few key factors. As an approved agent and homebuilder for homebuyers looking to purchase their first house, we understand the significance of making an informed decision. Allow us to guide you through the process and ensure a smooth and successful purchase of your new home. Here are some important points to consider-

1. Know how much you can spend

Before you buy a home, you need to know how much you can afford. It’s essential to assess your financial situation and determine how much you can comfortably afford. This involves evaluating your income, expenses, and existing debt obligations.

Consider factors such as your down payment, monthly mortgage payments, property taxes, insurance, and maintenance costs. It’s prudent to set a budget and stick to it, ensuring that your housing expenses align with your overall financial goals and stability. By understanding your financial capacity, you can make informed decisions and avoid overextending yourself financially in the home-buying process.

2. Costs to consider while buying a new home

When buying a new home in Australia, eligible first home buyers should consider various costs. These include the purchase price, stamp duty, which is a tax imposed on property transactions, and other government fees. However, there are exemptions and concessions available for first home buyers to alleviate some of these costs.

Additionally, if you are planning to build a home, you should take into account expenses such as land acquisition, construction costs, and potential council fees. It’s crucial to thoroughly research and understand these costs to make informed decisions and ensure a smooth home buying process. Dhursan Construction will help you navigate through all the options and help you find the best fit for your situation.

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3. Deposit needed to borrow for mortgages

Once you know how much you can spend and things you should consider beforehand, it’s time to work out what deposit you can put down. When it comes to borrowing for a mortgage, aiming for a deposit of around 20% of the house’s full value is often recommended. However, some lenders may accept lower deposits, such as 10% or 5%. If you are eligible for the first home owner grants, schemes like the Family Home Guarantee allow deposits as low as 2%, but there are specific requirements to meet.

Understanding borrowing capacity is crucial for first-home buyers before diving into homeownership. Lenders assess three key factors: annual income, monthly expenses, and loan details when calculating borrowing capacity. It can vary depending on several factors, including your credit history, employment stability, and the lender’s assessment criteria.

It’s important to note that higher income doesn’t always mean higher borrowing power, as existing financial commitments can limit disposable income. Home buyers looking to purchase their principal place of residence or even a substantially renovated home should consider these factors when completing the application form to secure favourable loan offers from lenders. Generally, lenders consider your ability to make regular mortgage repayments when determining the maximum loan amount they are willing to offer.

4. Shop for your dream home, inspect it, and make an offer!

Now, after you know your budget and get the pre-approved mortgage, create a list of must-haves and deal-breakers. Find a home builder or a real estate agent who understands your needs and budget. They will show you suitable properties and suggest hidden gems. During viewings, watch out for red flags like structural issues or outdated appliances. Ask about property taxes and fees that impact your budget. Remember, buying a home is emotional and financial.

Trust your instincts. Once you find the perfect property, make an informed offer. Include contingencies for financing and inspections. Work with your agent to negotiate a fair agreement. Finally, have the home inspected by a licensed professional to ensure its value and safety.

Will house prices drop in 2024 in Australia?

According to Forbes, experts predict that housing prices will likely stabilise and experience more moderate growth in 2024 as compared to 2023. However, the degree of this slowdown will depend on factors such as inflation trends and whether the anticipated interest rate reductions, expected to occur in the latter half of 2024, actually materialise. These factors play a significant role in determining the future trajectory of housing market conditions.

Staying informed about market trends and economic indicators will help you make more informed decisions. It’s always a good idea to consult with financial advisors or home-building experts like Dhursan Constructions who will provide assistance based on your specific circumstances if needed.

2024 Grants and Schemes available for First Home Buyers

In Australia, first-time home buyers have to meet different eligibility criteria for certain government schemes and incentives that can assist with borrowing. Let’s learn more about them-

A. The Home Guarantee Scheme (HGS)

HGS is an initiative by the Australian Government designed to assist eligible home buyers in achieving homeownership sooner. Administered by Housing Australia on behalf of the government, the scheme offers three types of guarantees:

  1. First Home Guarantee (FHBG): This guarantee supports eligible home buyers by enabling them to purchase a home with a deposit as low as 5%. In the fiscal year 2023-24, there are 35,000 available places under this category.
  2. Regional First Home Buyer Guarantee (RFHBG): Geared towards eligible home buyers in regional areas, this guarantee facilitates the purchase of a home with a deposit as low as 5%. In the fiscal year 2023-24, there are 10,000 available places under this category.
  3. Family Home Guarantee (FHG): Designed to assist single parents and single legal guardians with at least one dependent, this guarantee allows them to buy a home with a deposit as low as 2%. In the fiscal year 2023-24, there are 5,000 available places under this category.

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B. The First Home Super Saver Scheme (FHSSS)

FHSSS assists Australians in enhancing their savings for a first home by enabling them to accumulate a deposit within their superannuation, resulting in potential tax benefits. These contributions, along with estimated earnings, can be accessed for a home deposit from 1 July 2018. Utilising this scheme, most individuals can increase their savings towards a deposit by a minimum of 30% compared to saving through a regular deposit account.

First Home Owner Grant (FHOG)

FHOG scheme was implemented on 1 July 2000 to counterbalance the impact of the Goods and Services Tax (GST) on home ownership. This scheme is nationally funded by the state or territories and managed through their respective legislation. As part of the FHOG scheme, first-time homeowners who may be eligible are entitled to receive a one-time grant.

Select the territory in which you plan to purchase a home here.

Unlock Your Dream of Homeownership: Contact Us for Expert Assistance

As experienced homebuilders based in Sydney, NSW, we understand the unique challenges and decisions faced by first-time home buyers. Our team is here to simplify the process and empower you to make confident choices. From finding the perfect property to securing the best financing options, we will assist you with everything you need.

Experience a Smooth and Simplified Home Buying Process with us!- Reach Out to Us Today!

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