It’s tempting to think that buying your first house would be a wholesome and exciting experience - and while it is exciting, it can quickly turn draining. First home buyers can soon find themselves neck-deep in property ads and scrambling over finances without a proper plan.
Not to worry though, we’ve created a handy ‘buying your first home’ checklist of things you should definitely look into when taking that big step. From researching the right topics to dealing with the paperwork and creating clear goals, we’ve got you covered!
How to buy a property for the first time
House hunting IS exhausting. There’s quite a bit of prep that needs to be done before you start to narrow in on your perfect home - and the best property decisions are made with a clear mind and solid financial goals.
Following a 'First Home Checklist' can help you to think ahead in your investment plan as well as make sure you don’t forget any important factors.
1. Set down your property criteria
First, you need to work out what sort of property you’re looking for. Ask yourself some practical questions about what kind of living situation would work best for you and your family.
How many bedrooms would you need for you to live comfortably in?
Should you get a ground floor house or a storied home?
Do you have any family members that would find climbing stairs too difficult?
It’s important to differentiate between the house you want and the house you need. While your property options may not check every single criteria, narrowing down the ones that are most essential will help give you a realistic idea of what your first home will look like.
If you’re hoping to snag an investment property as your first home purchase, it’s best to focus your criteria on what your future renters might possibly look for in terms of functionality and affordability. Chasing after what you can’t afford will only make you go in circles. Prioritising needs over wants may also help you avoid loan sharks and set the foundation for more investment success.
Although more practical housing options may come with features that are a tad less exciting, they’ll set you up for sustainable living (and a sustainable investment!) in the long run.
2. Organize your finances
The next step in your first home buyers checklist should be figuring out your finances and how much you can realistically afford to set aside for the whole process.
- Would you rather cover the total purchase price in one go or opt for a loan?
- Are you financially secure enough to cover any loan repayment hurdles?
- Do you have enough saved up for a home deposit?
According to Budget Direct, home loan deposits are usually around 20% of the purchase price. The higher the percentage you pay, the lower your loan repayments will be! Australians are in luck though with competitive loan schemes and government assistance programs!
Apart from your loan deposits, you should also budget in an additional 5% of the purchase price to cover further homeownership expenses. Here’s a breakdown of some of the costs you can expect to incur.
- Fees for solicitors and conveyancing
- Lender’s application fee
- Valuation fee
- Inquiries and disbursals (title searches, etc.)
- Identification survey
- Adjustment of council rates
- Strata records inspection (if relevant)
- Stamp duty on transfer of title / on mortgage
- Mortgage insurance (if required)
- Home and Contents insurance (Read our Pre-settlement Checklist for Home Buyers to find out more!)
- Pest control and property inspections
Don’t forget about other expenses like changing the locks, carpet cleaning, removalist fees, connection fees for various services and costs associated with any urgently needed repairs - these will all add up!
3. Research the property market
The more you learn about the market, the wider your options are - allowing you to snag the best deals on the table. Remember to base your research on expert sources or fact-based pieces. Acting on the wrong information might land you with a dud investment that will bleed your wallet.
Here’s where you need to dig around when it comes to researching property markets:
Landing your dream house is great - but living next to noisy neighbours or pungent drains may quickly become a buzzkill for both you and your future tenants!
- Is it a warm and friendly neighbourhood?
- What are the crime rates in this part of town?
- How close are the nearest shops, schools, restaurants and hospitals?
- How far is your home from work - are easy and quick transport options available?
- Are there any unhygienic or dangerous factors about the location that concerns you?
Resident reviews on Homely may give you a behind-the-scenes peek at what goes down in your chosen suburb. Livability ranking and any past complaints from residents, (particularly those who’ve been there for a while), are definitely factors you should be looking at.
House prices mostly depend on their location - but your financial goals will play a huge part in deciding how much you want to spend.
The cheapest homes may not always promise capital growth, while homes that guarantee profits may require a huge investment at the start.
If you’re going for affordability, Realestate.com listed down some of the most reasonable suburbs in the city for first-home buyers in 2022:
Affordable first home suburbs in Australia
City / Suburb
Median House Price
Adelaide - Campden Park
Adelaide - Kuralta
Adelaide - Plympton
Brisbane - Wooloowin
Just below $400k
Brisbane - Stafford
Just below $400k
Melbourne - Travancore
Melbourne - Flemington
Perth - Wembley
Perth - Osborne Park
Sydney - Campsie
Sydney - Eastlakes
If you’re looking at making more green, Meridien Invest listed down some of the best capital growth locations:
High-yield first time investment suburbs in Australia
Median House Price
$1 million to $3 million
New South Wales
Over $1 million
Certain locations offer both: great capital growth and affordable purchase price. You might want to keep an eye on these. Remember to factor in how the purchase price of your first time investment property would affect your long-term and upfront expenses.
For example, the higher the price of the property, the more you will have to pay in property taxes.
Many first home buyers often forget to include rental potential on their first home checklist. If you plan on earning a passive income by renting out your property, checking on its rental potential is an absolute must!
Recent research shows that the ideal rental property is centrally located and has:
- Quick access to all essentials
No tenant wants to walk up for miles to get a taxi or crawl through traffic jams to get to the city hotspots. In fact, a house close to their office or university may be the ultimate deal-breaker for most students and working professionals on a budget.
- Low vacancy rates
Scope out your property’s suburb to see if occupancy has been high or low in the past few months. A suburb that has consistently sold or rented well has a higher probability of bringing rental success to you too.
Great commercial or retail developments that create more jobs or recreational facilities are also instant reasons for tenants to keep pouring into your part of the town.
- Great rental yield
Elevate your rental yields by optimising your property’s features. Redecorate on a budget, add more space or storage or consider renting out rooms in the same property to multiple tenants.
Here’s a quick look at the average numbers in each state:
Rental market trends by suburb
Approx Median Property Price
Median Rental Price (per week)
Median Rental Yield
New South Wales
Australian Capital Territory
If you’re a first-time investment owner, there’s a lot you’ll need to learn about becoming a landlord. To get you started, take a look at our quick tips on how to rent out a property for the first time.
There’s nothing that will help you learn more about the potential of a property than crunching the market trend numbers. There’s little point to buying a property that looks good at the outset but doesn’t appreciate as much in value over the years.
By analysing a suburb’s past performance, you can have an overview of when house prices are predicted to go up again and what the average price increase will be. Of course, these numbers may not be entirely accurate - no one can predict the future. But it’s certainly a good estimation based on historic data.
A common investment property strategy is to purchase your property in a location that usually generates great capital gains but is currently having an ‘off’ phase.
If the suburb’s performance record is strong enough, you could buy below the market rate and profit off increasing house value as the location heads towards recovery.
4. Choose your house-hunting approach
The stats and location figures might look great - but how do you find out about all the property gems that may lie down a hundred different streets and by-lanes?
If you’re on a low budget, printed and online real estate ads may be a quick and easy way to find out the basic details of rental homes. The downside is you may not be able to verify any statements that the current owner makes about the house. This means more time spent visiting lots of potentials.
Alternatively, a trusted and reputed real estate agent would be able to give you an accurate history of the house and advise you on what would work for you based on real-time experience.
An agent may also be able to advise you which suburbs have the ideal properties you’re looking for. This could help cut down on your time and money spent visiting listings with no real idea about their potential at all.
5. Consider a home loan
If you’ve finalised the property criteria and set the budget, but find the general property prices are still out of your reach - it may be time to consider working out a payment plan with the current owner. This would mean securing a home loan or applying for financial assistance (like the first home owners grant).
If you’re looking at taking out a home loan, here are some things to keep in mind:
- Borrow an amount that will not cripple you financially at any moment in time.
- Make sure that you have enough wiggle room every month for your monthly expenses and loan repayments.
- Maintain a savings buffer for any interest rate hikes or catching up on a late payment.
- With so much at stake, you might want to choose a bank that is trusted and reputed.
- Choose lenders that offer flexible repayment schemes. Do a quick look around at the general interest rates and which loan scheme would work for you.
- Low-interest rates are a safe bet to live comfortably every month while repaying your loan, but the repayment period will be longer. It may be worthwhile opting for a higher rate if you can afford it, and finish off the loan quickly.
Remember - a well-planned investment is always better than a rushed one!
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Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.
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