First home? Here’s how you can figure out what you can afford
We get it – entering the property market for your first time can be financially intimidating. But so long as you’re equipped with the right information to help you work out and stay within your budget, you can be a property owner in Australia in no time!
Buying your first home is an Australian dream that is seemingly getting harder to achieve. And no wonder, with housing prices averaging around $681,100 (reports the Australian Bureau of Statistics – Residential Property Price Indexes, 2018), it can be hard to get a foot on the property ladder. It can take a long time to save up a deposit for a property costing over half a million dollars!
But these figures shouldn’t frighten motivated first-time home buyers from getting into the home loan market. Here’s how you can figure out what you can afford.
Budgeting for the upfront and ongoing costs
The first step in figuring out what house you can afford begins with creating a budget around the upfront costs as these immediate expenses are often the most expensive part about the whole process. Here’s what these expenses entail:
- The deposit: You should aim to save up for 20 per cent of the purchase price. If you borrow more than that you’ll likely end up paying extra costs for lenders mortgage insurance.
- Stamp duty: The amount of stamp duty (the tax payable on a property purchase) varies based on the state or territory you’re in and the value of the property. (You can read about this in our pervious blog here.)
- Inspection fees: This includes costs for building reports and pest inspections, the cost of these depend on the size of the property and the level of detail required, but can be a couple hundred dollars.
- Conveyancing: There are no set fees, and are negotiable so you will need to work with you conveyancer to get an estimate for you.
Once you have a rough understanding of what these costs are going to look like, you’ll know what you can afford, and you can start to consider your home loan options.
Getting a home loan
Securing finance is absolutely essential when buying: no loan, no first home. Beyond Bank’s home loans are designed to be flexible so they can work with whatever stage of life you’re in:
- Special Low Variable Rate Home Loan: no upfront or ongoing fees.
- Total Home Loan Package: a flexible home loan that provides a discounted rate and bundles other banking benefits, all for a fixed annual fee.
- Basic Variable Home Loan: borrow up to 90 per cent of the value of the property.
- Fixed One year: fixes your interest repayments for up to 5 years, so you can budget better.
- Standard Variable Home Loan:$0 monthly fees.
To help simplify this process, use Beyond Bank’s loan repayment calculator to easily adjust your preferences until you find a plan that’s on track with your budget.
Getting pre-approved means you can get serious about house hunting.
After you’ve figured out your budget, your next step is to get your home loan pre-approved. In this process, your needs and your overall financial position are reviewed, this includes your credit score so we can better determine what type of home loan is best for you.
Getting pre-approved means you can start taking your search seriously – knowing how much money you can borrow will help you refine your search so you can begin to look for homes within your price range.
Additional resources that will help you get into your first home
The First Home Owner Grant (FHOG) scheme is a one-off grant designed for new, want-to-be home owners funded by the states and territories. Eligibility varies based on where you reside, so you should do your own research into your specific area, but the overall goal is to get you into a house.
If this is your first home, we understand you probably still have some questions about how it all works. Don’t feel shy about asking the team at Beyond Bank for more information on your first home loan. We’re here to help make this process as smooth as possible for you – contact us today!