5 Tips for First-Time Buyers: Advice from an Experienced Mortgage Broker

Buying your first home is an exciting milestone, but it can be challenging. The process involves multiple steps, from understanding your finances to finding the right property and securing the ideal loan. Many first-time buyers in Australia face similar challenges, including saving for a deposit, understanding the competitive market, and navigating the loan approval process. This blog will help simplify your journey by introducing five essential tips for first-time buyers, backed by insights from industry experts and data from reliable sources. 

Understand Your Budget and Borrowing Capacity 

Before you start house hunting, it’s essential to understand how much you can afford. Your borrowing capacity depends on your income, expenses, credit score, and existing financial commitments. According to the Australian Bureau of Statistics (ABS), Australia’s average first home loan size was approximately $485,000 in 2023, highlighting the importance of realistic financial planning. 

How to Get Started? 

• Review your income and expenses to create a detailed budget. 

• Factor in existing debts such as car loans or credit cards. 

• Aim for a credit score of 622 or above, considered “good” in Australia, to increase your chances of loan approval. (Equifax provides detailed insights into credit scores and financial health.) 

Pro Tip: Get a personalised consultation to assess your financial situation and connect with lenders who match your profile. 

Save for More Than Just the Deposit 

While saving for a 20% deposit is crucial, many first-time buyers underestimate additional costs. These can include stamp duty, conveyancing fees, building inspections, and lender’s mortgage insurance (LMI) if your deposit is less than 20%. 

Key Data to Consider: 

• Stamp duty varies by state but can amount to tens of thousands of dollars. For example, in Victoria, stamp duty on a $600,000 property is approximately $31,000. Check the Australian Taxation Office (ATO) for stamp duty guidelines. 

• First Homeowner Grants (FHOG) can reduce your costs by up to $10,000 in most states and even more in regional areas. 

Pro Tip: Plan an additional 5-7% of the property value to cover these extra costs. 

Get Pre-Approval Before House Hunting 

A pre-approval is a conditional agreement from a lender stating how much you can borrow. It gives you a clear budget and signals to sellers that you are a serious buyer. 

Why It Matters: 

• In 2023, CoreLogic reported that properties in major Australian cities spend an average of just 28 days on the market, meaning competition is fierce. 

• With pre-approval, you can act quickly and confidently when you find the right property. 

Pro Tip: Choose a company that works with a wide network of lenders to ensure you get the best pre-approval deal tailored to your needs. 

Research the Market and Choose the Right Property 

Researching the market ensures you make a decision that aligns with your current and future goals. Look for properties in areas with strong growth potential, good infrastructure, and proximity to essential services. 

Australian Market Insights: 

• According to Domain‘s 2023 report, suburbs with access to public transport, schools, and employment hubs tend to have higher capital growth. 

• Regional areas are becoming more popular among first-home buyers, offering larger properties at lower prices. 

Pro Tip: Get insights into market trends and evaluate properties based on their investment potential. 

Seek Professional Guidance 

Going through the home-buying process can be stressful, especially with the complexities of loan options, interest rates, and legal requirements. Working with an experienced mortgage broker ensures you have expert guidance every step of the way. 

Why Choose a Mortgage Broker? 

• According to a 2023 study by the Mortgage and Finance Association of Australia (MFAA), brokers facilitated 71.7% of all new residential home loans, highlighting their value in the market. 

• Brokers can access various lenders and loan products, offering tailored solutions you might not find independently. 

Pro Tip: From comparing lenders to explaining loan terms, choose a company committed to making your home-buying experience smooth and stress-free. 

Final Thoughts 

Buying your first home is a significant milestone, and with the right preparation, it can be a rewarding experience. By understanding your finances, saving for all costs, securing pre-approval, researching the market, and working with an experienced mortgage broker, you can turn your dream of homeownership into reality. 

At ARG Finance, led by the highly experienced Rakesh Gupta, we specialise in helping first-time buyers navigate the complexities of the property market. With a focus on personalised service and industry expertise, our team is here to guide you every step of the way.