How to Get a First Home Buyer Loan and Other First Home Buying Tips from a Mortgage Broker

Has buying your first home come with more challenges than you expected? If so, you’re certainly not alone in feeling that way. Obtaining a first-home buyer loan has undoubtedly gotten tougher. After releasing the findings from the November 2023 CoreLogic Housing Affordability Report, head of research Eliza Owen stated, “This is one of the most challenging times for first home buyers that we’ve seen in the data historically.”

With these new challenges, it’s become more important than ever for first home buyers to understand the unique circumstances they face. By seeking expert advice on how to buy a house, first home buyers will not only avoid some unpleasant surprises, but they’ll also be better placed to achieve their ultimate goal of buying a home.

Why Has It Become More Difficult to Secure a First Home Buyer Loan?

What’s making it so hard to secure a first home buyer loan? The CoreLogic research points to a range of factors, including ongoing interest rate hikes, rising median house prices and a spike in rental costs. As a result, many families are grappling with how much of a deposit they need for a house. 

So, how much deposit do you need for a house? A recent article in the Sydney Morning Herald reported that it’s now taking the average Aussie family 10 years to save for the recommended 20% house deposit. And even with a deposit, interest rate rises have resulted in a widening gap between how much buying a home now costs and how much a first home buyer can afford to borrow.

If you’re wondering how to buy a house with all of these added challenges, then don’t worry – we’re here to help. Our experienced team of mortgage brokers have put together a comprehensive guide to help you have success buying a home. Read on for some expert tips tailored to first home buyers or contact ZEP Finance directly for a free consultation.

Your Guide to a First Home Buyer Loan

In this free guide, we’ve shared our top tips to help you successfully navigate the process of obtaining a first home buyer loan:

1.   Use the services of an experienced mortgage broker

At ZEP Finance, we can find the most suitable loan to suit your unique financial situation. We’ll factor in all the costs, discuss how much of a deposit you need for a house, compare loans from a panel of lenders and provide expert advice on which loan product will work best for you.  

2.   Work out your borrowing capacity

It’s a good idea to meet with a broker for an accurate assessment of your borrowing capacity before you start looking at properties. You can then apply for pre-approval and start house hunting within an established budget.

3.   It pays to shop around and compare

It might be tempting to buy the first house you see but take the time to look around and compare prices. This will ensure you get value for money in the area where you plan to buy.

4.   Identify what features you want the property to include

Think about what features you consider non-negotiable for the property you plan to buy. This could be the number of bedrooms, the inclusion of a garage or a certain sized yard. Make a list of needs vs. wants and use this to assess the various properties you’re considering.

5.   Choose the structure of your loan

Your loan structure will play an important role in your financial future, so take the time to discuss various options with your broker. For example, if you’re worried about interest rate rises, you could decide to split your loan so a portion is a fixed rate and the remaining is variable. 

6.   Consider an accelerated repayment schedule

Choosing accelerated fortnightly repayments instead of monthly repayments will save you in interest and help you pay back the loan faster. A fortnightly repayment schedule allows you to pay half the monthly repayment each fortnight. With 26 fortnights in a year, this is the equivalent of 13 monthly repayments over a year.

7.   Don’t overextend yourself when buying a home

Will your loan repayments still allow you to live comfortably? Remember a home loan is generally a 30-year commitment. You don’t want your first home buyer loan to have a major impact on your lifestyle.

8.   Consider including an offset account or redraw facility

These features can be used as a way of saving to help you renovate in the future or so you have backup funds available in case of an emergency.

What You Should Know About the Costs of a First Home Buyer Loan

Many first home buyers are caught by surprise when it comes to the associated costs of buying a home. These costs, such as legal fees, stamp duty and conveyancing, can add up very quickly.

For example, imagine you’re planning to buy your first home in Queensland for $500,000. As a first home buyer, you’re exempted from stamp duty expenses (which otherwise would have cost an added $8,750). But you’ll still need to pay for building/pest inspections, mortgage registration fees, transfer fees, loan application fees and conveyancing/legal fees. 

Combined, this could add $5,000 to your purchase price. Additionally, with only a 10% deposit, you’ll need to allow for Lenders Mortgage Insurance (which could cost in the vicinity of $12,000). So, while your purchase price may be $500,000, you’ll need to allow an additional $17,000 for those added upfront and hidden costs.

How to Buy a House with the First Home Buyers Grant in QLD & NSW

These costs might sound alarming, but by consulting with a mortgage broker and calculating all the added costs upfront, you’ll be able to plan accordingly. One very important factor to consider is whether you may be eligible for the First Home Buyers Grant in QLD. As a result of recent increases to the First Home Buyers Grant in QLD, eligible first home buyers could now receive payments of $30,000.

In NSW, a $10,000 First Home Owner Grant is available for eligible applicants planning to buy or build their first new home. First home buyers in NSW could also save thousands of dollars with the First Home Buyers Assistance Scheme, which provides a transfer duty exemption or reduction for eligible buyers.

To find out more about the eligibility requirements for the First Home Buyers Grant in QLD or the First Home Owner Grant/First Home Buyers Assistance Scheme in NSW, talk to a local broker.

Talk to a Broker About Your First Home Buyer Loan

You’ll face many challenges when applying for a first home buyer loan. But a good mortgage broker can make sure you get the most out of your investment. ZEP Finance specialises in assisting those who are buying a home for the first time in the Northern Rivers or South East Queensland area. Being an established local mortgage broker, we are familiar with the stress caused by home loan applications and the pitfalls many first-time buyers face. We can advise how much of a deposit you need for a house, recommend the right loan structure for your needs and help you avoid paying too much interest on your first home buyer loan. To ensure you get the right type of loan for your situation, book an appointment with ZEP Finance.