What Are the Property Hunting Techniques for First Home Buyers?

Understanding Your First Home Buyer Budget

Before you start inspecting properties, establishing a realistic first home buyer budget is essential. This involves understanding what you can afford based on your income, savings, and deposit amount. Many first home buyers begin their journey with a 5% deposit or 10% deposit, depending on their circumstances and the home loan options available.

Your budget should account for more than just the property price. Consider additional costs such as stamp duty (though first home buyer stamp duty concessions may reduce this), Lenders Mortgage Insurance (LMI) if you're borrowing more than 80% of the property value, conveyancing fees, building and pest inspections, and ongoing costs like council rates and maintenance.

Creating Your First Home Buyer Checklist

A comprehensive first home buyer checklist helps you stay organised during your property search. Your checklist should include:

• Deposit savings target and current amount saved
• Pre-approval status for your first home loan application
• Preferred suburbs and property types
• Must-have versus nice-to-have features
• Maximum budget including all costs
• Timeline for purchasing

Having pre-approval before you start property hunting gives you confidence when making offers and shows sellers you're a serious buyer. The pre-approval process involves submitting a first home loan application to determine how much lenders are willing to provide.

Researching Property Markets Across Australia

Successful property hunting requires thorough research into different areas that match your lifestyle and budget. Consider factors such as proximity to work, schools, public transport, shopping centres, and future development plans that might affect property values.

Many first home buyers find opportunities in regional areas where property prices may be more accessible. The Regional First Home Buyer Guarantee can help eligible buyers purchase in regional locations with a deposit as low as 5% without paying LMI.

Maximising First Home Buyer Grants and Schemes

Australia offers several initiatives to assist those buying your first home. Understanding first home buyer eligibility for these programs can significantly impact your purchasing power:

First Home Owner Grants (FHOG): State and territory governments provide first home owner grants for eligible buyers, particularly those purchasing new homes or building properties.

First Home Loan Deposit Scheme: This government initiative helps first home buyers enter the market with low deposit options, requiring only a 5% deposit while avoiding LMI.

First Home Super Saver Scheme: This allows you to save for your deposit through voluntary superannuation contributions, potentially offering tax benefits.

Research which first home buyer grants apply in your state or territory, as eligibility criteria and grant amounts vary across Australia.

Attending Property Inspections Strategically

When attending inspections, approach each property with a critical eye. Bring your checklist and take notes on each property's condition, layout, and features. Don't hesitate to ask questions about the property's history, any renovations, and reasons for selling.

Consider attending multiple inspections for properties that interest you - seeing a property at different times of day can reveal important details about natural light, noise levels, and neighbourhood activity. Bring someone you trust for a second opinion, as they might notice things you overlook.

Understanding Home Loan Options Before Making Offers

Before committing to a property, ensure you understand the various home loan options available. This knowledge helps you structure your finance appropriately and negotiate with confidence.

Key considerations include:

Interest Rate Types: Decide between a variable interest rate, which fluctuates with market conditions, or a fixed interest rate, which locks in your rate for a set period. Some borrowers choose a combination of both.

Loan Features: Consider whether features like an offset account (which can reduce interest paid) or redraw facility (allowing access to extra repayments) align with your financial management style.

Interest Rate Discounts: Many lenders offer interest rate discounts for factors like high equity, professional packages, or additional products.

Preparing Your Home Loan Application Documentation

Having your documentation ready speeds up the process when you find the right property. When you apply for a home loan, you'll typically need:

• Proof of identity (driver's licence, passport)
• Income verification (payslips, tax returns, employment contracts)
• Savings history (bank statements showing genuine savings)
• Details of any existing debts or commitments
• Information about the property you're purchasing

If you're receiving a gift deposit from family members, you'll need a signed declaration confirming the funds are a gift, not a loan.

Making Strategic Offers

When you find a property that meets your criteria, research recent sales of comparable properties in the area to inform your offer. In some markets, properties sell at or above asking price, while in others, negotiation room exists.

Don't let emotions override your budget. If a property exceeds what you can comfortably afford, continue your search. Remember that your first home buyer checklist keeps you focused on your priorities and prevents impulsive decisions.

Working with Professional Support

Property hunting becomes more effective when you have professional guidance. A mortgage broker can help you understand your borrowing capacity, identify suitable lenders, and manage your home loan application process. They can also help you understand how different loan structures might affect your repayments and long-term financial position.

Real estate agents, conveyancers, and building inspectors each play important roles in protecting your interests throughout the purchase process. Building a team of trusted professionals makes buying your first home more manageable.

Conducting Due Diligence

Once you've made an offer that's been accepted, thorough due diligence protects your investment. This includes:

• Professional building and pest inspections
• Reviewing the contract of sale with a conveyancer or solicitor
• Checking planning permits and zoning restrictions
• Investigating body corporate records for units or townhouses
• Verifying there are no outstanding rates or charges

These checks provide opportunities to renegotiate or withdraw if significant issues arise.

Understanding Lenders Mortgage Insurance

If you're borrowing more than 80% of the property value, Lenders Mortgage Insurance (LMI) typically applies. This insurance protects the lender if you default on your loan. While it increases your upfront costs, it allows you to enter the market sooner with a smaller deposit.

However, schemes like the First Home Loan Deposit Scheme and Regional First Home Buyer Guarantee can help eligible first home buyers avoid LMI even with deposits as low as 5%.

Property hunting as a first home buyer requires patience, research, and strategic planning. By understanding your budget, utilising available grants and schemes, and approaching inspections methodically, you'll be well-positioned to find a property that meets your needs and financial capacity.

Our team at Empire Road Investments specialises in helping first home buyers understand their options and secure appropriate finance for their property purchase. We can guide you through understanding first home buyer eligibility, accessing low deposit options, and structuring your home loan to suit your circumstances.

Call one of our team or book an appointment at a time that works for you to discuss your property hunting plans and financing options.