Buying your first home – We answer your FAQs
Buying your first home can be daunting. The friendly team at Torhaven Deebing Heights have answered some of the most common questions first home buyers have!
How do I begin the buying process?
Start a savings plan for your deposit, and to show the bank you can meet mortgage repayments in future. Prepare a household budget to see how much you can save, and open a bank account for savings. ASIC’s MoneySmart website has a great budget tool.
How much can I borrow?
Consult your bank or mortgage broker to determine the maximum amount you can borrow. Then use your household budget to decide how much you are comfortable with borrowing to still enjoy the lifestyle you want.
How do I get the First Home Owners’ Grant?
Eligible first home buyers can access the extended grant of $20,000 if a contract is signed by 30 June 2018 – even if settlement occurs later. For eligibility and to apply, go to the Qld Government’s First Home Owners’ Grant website or call 1300 300 734.
How much deposit will I need?
A 20% deposit is best to avoid paying Lender’s Mortgage Insurance, but don’t stress if you can’t achieve that. Aim for at least 5% – 10% deposit, and keep some money aside for buying costs. Some lenders will finance up to 95% of property’s value, but consider interest rates as well to determine the best deal.
Will I have to pay Lender’s Mortgage Insurance?
This insurance applies if your deposit is less than 20%, calculated as a percentage of your loan and based on your deposit – the higher the deposit, the lower the percentage. The insurance benefits the bank in case of loss on your loan.
What costs are involved in buying a property?
Allow for loan application fees, conveyancing fees, building and pest reports, and transfer duty –the biggest cost. Use the Transfer Duty Calculator on the Queensland Government website to determine the duty on your purchase. Fortunately, concessions apply for first home buyers, and Queensland Stamp duty is less than NSW and Victoria.
Should I buy an established home or build?
Weigh up the cost of building a new home with buying a cheaper established home, and factor in maintenance and repair costs. Get a building and pest inspection to understand the costs, as initial savings can quickly be eroded if issues arise.
The benefit of building a new home is that many builders will guide you through the purchase process, help with structuring for your deposit, arranging finance and applying for the First Home Owners’ Grant.
Whatever you decide, weigh up all factors to get the best outcome for you, and consult a financial advisor if in any doubt.