Money Buddy guide to … buying your first house

The task of buying the perfect home for you and your family can be a daunting prospect, with the necessary financial considerations a seemingly endless list of outgoings. So where do you start?

The First Home Owner's Grant

In July 2000, the Federal Government established the First Home Owner's Grant, designed to assist first time buyers with the cost of purchasing a home. The nature of the grant has changed several times since its inception, so it's important to consult with your appropriate state government department for current regulations.

Generally speaking to be eligible for the First Home Owner's Grant, the following criteria must be fulfilled:

The purchaser must be an Australian citizen or permanent resident buying or building their first home in Australia.
The property must be a recognised house, home unit, flat or other self-contained fixed dwelling, specifically designed for residential purposes.
The Grant must not have been claimed previously.
The home must be occupied by the applicant within twelve months of purchase settlement or building completion.
Application for the Grant must be made within twelve months of settlement or building completion.

The tax-free, one-off payment of $7,000 is not means tested, so any first home buyer who meets all the criteria is eligible. Applications made in joint names will only be entitled to one payment for the single property.

The different State and Territory Governments around Australia also have additional eligibility criteria, such as minimum age limits and periods of occupancy. Some states only pay the grant for new homes. All are different so check with your local authority for their specific details.

How much can I borrow?

Every lender is different but as a general rule of thumb, most lenders will offer owner-occupiers up to 95% of the total purchase price. Some loans are designed to cover the full purchase price, however these loans often come with limitations, higher fees or additional conditions attached, so always remember to read the fine print.

The total amount loaned will depend on a number of variables, such as family income and expenditure.

Saving for your home

A deposit is just one cost associated with buying a house. Others include:

Loan application fees.
Stamp duty.
Legal costs.
Insurance – including mortgage cover, home buildings and contents.
Inspection fees – including building and pest inspections.
Utility connections – water, electricity, gas, telephone.
Council rates.

By setting realistic goals, cutting back on unnecessary costs and keeping to a budget, saving for your first home doesn't have to be an impossible task.

The home buying process

First and foremost you need to know how much you can borrow. Without this information your house hunting could turn out to be a big waste of time. Most lenders offer a pre-approval service in which you can find out exactly how much you can borrow, even before you begin your search.

Have a good idea of what you are looking for including location, size, type of dwelling and price. Don't be pressured into making a decision by the real estate agent; take your time, because it could end up being the most expensive mistake of your life.

When you finally find that perfect home, transfer of title is a necessary legal process. This can be completed through either a solicitor or conveyancing firm. There are kits available to help you complete this process yourself, however it is a complicated procedure and not recommended for the novice.

And, finally, take all the advice you can find. This is an important and expensive exercise so, once it's all over and done with, you need to be able to relax and enjoy your new home.