Buying a home is a huge decision and might be one of the most expensive purchases you ever make. Our mortgage brokers have prepared a checklist to help you through your first home buying journey.

Beware of the costs involved

  • Purchase price
    If you’re not paying for the property outright (which many don’t), you’ll need to take out a loan. With your loan, lenders often ask for a minimum of 5 to 20% deposit. If you can, consider putting down a higher deposit as there are advantages such as lower mortgage repayments or use the extra savings to put an offer on a better house.
  • Lender’s mortgage insurance (LMI)
    If your deposit is less than 20%, you may be required to make a one-off payment to your lender which covers them in case you can’t make your repayments. This amount can be paid upfront or added to your loan.
  • Stamp duty
    If this is your first home and you purchase over the threshold for first home buyer incentives, you’ll have to pay stamp duty. The threshold for first home buyer incentives and the stamp duty rate varies from state to state. Your mortgage broker can help identify what your stamp duty costs will be.
  • Settlement costs
    Make sure you put aside funds for the settlement agent/conveyancer and any property costs (for example your share of the rates at the time of purchase). These costs can be anywhere between $5,000 to $10,000, depending on your purchase price.

Check your credit report

Lenders use your credit report as part of their decision-making process when approving or rejecting your loan application. If your credit report shows missed repayments or financial issues in the past, it could affect your chances of getting a loan. Head to Get Credit Score to see where you are at and to start monitoring your credit health. If you are engaging with a mortgage broker and looking to apply for credit, you can use Equifax to receive a free official credit report.

Keep in mind that credit inquiries (or credit searches) will affect your credit score. Too many hard inquiries (home loans, student or personal loans or credit cards) suggest that you’re in financial trouble and need a large amount of credit. Therefore, every hard inquiry translates into a five-to-ten-point reduction in your credit score. The good news is, getting a credit report won’t hurt your score. Checking your own credit score is classified as a soft inquiry. 1

Sort out your personal debt to increase your borrowing power

You’ll find that getting a home loan is harder if you already have personal debts, or at the minimum will affect how much you can afford to borrow. Find out how much you can borrow and focus on paying off any large and/or unsecured debts and credit cards before you apply for a home loan (especially high-interest debts).

You could consolidate your debts into one, but it’s recommended you try to pay them off.

Also beware of promotions such as Afterpay, ZipPay and interest-free credit cards. Just because there’s an interest-free period, doesn’t mean it doesn’t count. It counts and the banks will include it as part of your expenses.

Track your spending

If you do speak to a broker or lender, the first thing they’ll want to know is what your spending habits are. How much do you spend on electricity? Haircuts? Entertainment? Food? Eating out? Get ahead of the game by figuring this out in advance. Cut your expenses where you can as the banks assess your borrowing capacity based on your monthly expenditures. The more monthly living costs you have, the less you’ll be able to borrow.

Know how much you can spend and stick to your budget

On top of tracking your spending, make sure you’re aware of how much money you’ll have access to, whether that be through savings or other financial assistance. If you’ve got hefty financial commitments, make sure you factor that into your budget.

Our brokers recommend getting pre-approval first, so you know exactly how much you can afford to borrow and won’t be tempted to overspend (especially once you see the repayments!).

Life has a way of throwing unwanted financial surprises at us and that’s why we recommend keeping some money away in an emergency fund. Make an active effort to have extra cash around for disastrous possibilities such as a damaged roof, broken heating system or appliance repairs.

Don’t let yourself feel pressure and try to avoid FOMO

Remember that real estate agents are expert salespeople and they’re working for the seller. It’s usually in their best interest to get a quick sale at the highest possible price. Expect that they may put pressure on you to make an offer ‘before someone else snatches it up’.

It’s important to remember that if it doesn’t feel right, you can always walk away. There will always be another property so try not to get caught up in the fear of missing out (FOMO).

See what financial assistance may be available

Below are some financial assistance options that may be worth investigating with your mortgage broker:

  • First Home Owner Grant (FHOG)
    State governments may offer a one-off grant to eligible first home owners, usually for newly built properties or ones yet to be built.
  • Stamp Duty Concessions
    Certain state and territory governments offer additional incentives to first home buyers, some of which involve stamp duty concessions.
  • New Home Guarantee
    An Australian initiative to help home buyers purchase their first home sooner, the New Home Guarantee replaces the need for Lender’s Mortgage Insurance (LMI) for someone who builds or buys newly constructed. 2The requirements are a 5% deposit (which must be genuinely saved – money that you have gradually saved up over time). The New Home Guarantee has been extended with additional 10,000 places available from 1 July 2021 to 30 June 2022.2
  • First Home Super Saver Scheme
    In an effort to increase housing affordability, the First Home Super Saver Scheme (FHSSS), allows eligible first home buyers to withdraw voluntary super contributions of up to $30,000 for individuals or $60,000 for couples, to put towards a home deposit. 3

Your mortgage broker will be able to guide you through these applications and what you need to have to be eligible. Keep in mind that you might be eligible for more than one of these government programs.

Seek advice from an expert

Buying your first home is a confusing and complicated process. Our mortgage brokers can help you navigate the loan market and help you find the best possible mortgage to suit you.

At Carbon, we know that purchasing your first home is a big decision so we encourage you to bring along a family member for moral support during your meetings with our brokers. Buying your first house is a big step both emotionally and financially and it’s understandable to want to have your family or friends there to help guide you. Get in touch with our Finance & Lending team today to get started on your home buying journey.


1 Do credit inquiries affect your credit score?

2 New Home Guarantee

3 First Home Super Saver Scheme