Logo
Explore homes in app

First Home Buyers Guide - Part 1: Preparing to Buy Your First Home

By Coposit
12/10/2023

Buying your first home can come with quite a few challenges. Whether you’re buying your first home or looking for an investment property, it’s always good to be prepared. Read our guides for first-time home buyers!

Sorting Out Your Budget

It's most likely that one of your major considerations when buying a first home will revolve around money. There are few upfront costs to consider when purchasing off-the-plan property, however, by creating accurate estimations and budgeting correctly, these can be successfully accounted for.

Home Loan Deposit

The recommended amount for a house deposit in Australia is 20% of the full purchase price (or valuation of the property). The good news about buying off-the-plan property, is that most states require by law that the deposit cannot exceed 10% of the contract price. With Coposit payments, you can pay in instalments until the property has been built.

Mortgage Fees

When applying for a mortgage, home loan lenders will look at the details of the property, your income, spending and a range of other factors that affect the repayment interest rate. Getting a quote before applying for the mortgage is a good way to get an estimate and see if the property and repayment plan are within your budget.

Stamp Duty

If the off-the-plan property’s value is above a certain threshold (as dictated by local state laws), you will need to pay stamp duty upon completing the settlement.

This amount can be calculated with a stamp duty calculator online, and is an important factor to consider when you budget for a first home.

Run the numbers and understand your budget.

Research Government Grants & Initiatives

It can seem daunting with all these major costs before even buying the property, but there are initiatives that can help.

First Home Owners Grant

The First Home Owner Grant (FHOG) is a national scheme that was introduced on July 1st, 2000. It was established to assist first-time home buyers with the costs associated with purchasing a new home. The grant amount, eligibility criteria, and specific provisions vary from state to state.

For those who are eligible, the typical amount of the grant is usually around $10,000 to go towards the purchase of the new home. An off-the-plan buyer is also eligible for the FHOG, and can apply for the scheme when they organise their mortgage on settlement.

Potential After-Purchase Costs To Consider

Another factor to consider in your budget, are potential costs once you have purchased the property. These include some costs that are optional, such as insurance, or some costs that only apply to certain states on council locations, like land tax.

Settlement Fees & Costs

Settlement fees cover the administrative and legal processes involved when transferring property ownership from the seller to the buyer. This includes the costs of the professionals who facilitate this transfer.

Inspection Fees

Inspection fees relate to the cost of having professionals inspect a property before purchase. This could include building and utilities inspections, pest inspections, and anything else you want to check before making a decision.

Land Tax

Land tax is based on the value of the land your property will occupy. The tax rate often varies depending on the current market rates and the local laws, either at the state or council levels.

Home Insurance

Home insurance, often referred to as homeowners insurance, provides financial protection against damages to the home and its contents. It may also offer liability coverage against accidents in the home or on the property as well as fires and theft.

Getting Pre-approval

Conditional approval (a.k.a pre-approval or approval in principle) gives you the confidence to make an offer for the right off-the-plan property and may involve verification of your financial position and other necessary background checks.

You can work out the conditions and size of your mortgage before the approval stage without it affecting your credit history by completing an application online. Once you have found a home loan that works for you and your budget, unconditional approval is granted just before you finalise the purchase of a property.

Now that you understand purchasing your first property off the plan, find out exactly how Coposit works. For everything related to purchasing your first off-the-plan property, contact us at Coposit to get started.

Share this article