FAQ for First Time Home Buyers

When you’re planning to enter into the property market, you can contact your lender and request pre-approval to loan a certain amount of money – this is known as conditional approval. For example, the lender may advise that you are able to take out a loan of up to $500,000.00. Having pre-approval will help you to determine what price range you can search for and will give you a good indication of whether you will be successful in applying for a loan for that amount. 

When you’re planning to enter into the property market, you can contact your lender and request pre-approval to loan a certain amount of money – this is known as conditional approval. For example, the lender may advise that you are able to take out a loan of up to $500,000.00. Having pre-approval will help you to determine what price range you can search for and will give you a good indication of whether you will be successful in applying for a loan for that amount.

Not everyone is eligible for the First Homeowners Grant. There are certain criteria that must be met, and these criteria vary between the different states and territories. General criteria include:

• Being 18 years old or over
• Being an Australian citizen or permanent resident
• Being an individual rather than a company or a trustee
• You must be a first-time recipient of the grant
• You must be a first-time residential property owner
• You are also required to move into your new home within a year and live there continuously for at least 6 months, depending on the state

There are further limitations that may be applied in certain states, including a price cap on the value of the property or the requirement for the property to be a new build.

Stamp duty is another up-front cost involved in purchasing a property. Stamp duty is a tax imposed by all Australian states and territories and is meant to pay for the cost of transferring the tile of the property into your name.

Stamp duty can be very expensive, often adding tens of thousands of dollars to the total property cost.

As a general rule, stamp duty increases with the value of the property. Stamp duty differs between states.

A building and pest inspection is a necessity when purchasing a home. There may be underlying structural faults, problems with the electrical wiring or plumbing, termite infestation, or a number of other issues that can be very expensive to fix and may be missed by the untrained eye.

Aside from the purchase of the property, stamp duty, legal fees, and building and pest inspection, there are other hidden costs that could be overlooked by first home buyers. These include:

• Mortgage registrations
• Establishment/application fees for your home loan
• Settlement attendance fees
• Lenders mortgage insurance
• Valuation of property
• Connecting utilities
• Removalist fees

It’s important to do your research on what other fees may be involved in the purchase of your home.

There are two main ways to purchase a property: by private treaty, or by auction.

Buying a home by private treaty

This is also known as a private sale which requires the vendor (the seller) to set a price from the start of their campaign. This allows them to receive and consider offers from prospective buyers. As a prospective buyer, you can put forward an offer through the real estate agent to the owner. Once the offer has been accepted by the owner, there is a cooling off period. This is when certain conditions must be met in order for the sale to proceed, this may include obtaining finance, or building and pest inspection.

Buying a home at auction

An auction is a gathering of buyers who publicly bid for a property. It is conducted by an auctioneer who is a licensed real estate agent. Buying a property at auction is very different to other property purchase methods as it requires you to enter an unconditional contract and pay a deposit once the auction has concluded. If you are unable to proceed with the contract, the deposit will be forfeited. To avoid this, it is advised that you seek pre-approval before bidding at an auction.