10 Key Considerations for First Home Buyers Heading into 2024

For most people, buying their first home is both a significant milestone and a dream come true. But as we approach 2024, it is becoming harder than ever to achieve this goal due to the rising cost of living, the volatile nature of the property market and the tougher lending criteria many financial institutions are imposing on homebuyers.

That said, it is not impossible, and there are several things you can do to improve your chances of securing a place you will be proud to own.

In this article, we will highlight 10 key considerations that first homebuyers should adopt when kickstarting the process. If you follow these steps, it will go a long way towards enhancing your chances of taking your first steps on the property market.

 1. Understand Your Budget

When kickstarting the process of buying your first home, it is important to set a realistic budget. To do this you will need to fully understand your financial situation in terms of your income, expenses and any outstanding debt obligations you may have.

Most financial institutions offer online tools and calculators that you can use to assess your borrowing capacity, which will help you come up with the maximum price you will be able to pay for a property. However, you should also take into account other factors such as potential mortgage payments (factoring in increases if they are based on a variable interest rate), property taxes, homeowner's insurance and general maintenance costs. 

At the end of the day, the more exacting your budget is, the easier it will be to focus your search and the less likely you are to experience potential financial strain.

2. Save a Deposit

When it comes to buying a home in Australia, most financial institutions will expect you to have a deposit of between 10% and 20% of the total purchase price of the property to put down as an initial payment.

For example, if you want to buy a house worth $500,000, you will need to have a deposit of between $50,000 and $100,000 to secure a mortgage.

Therefore, the earlier you can start saving for this deposit the better - whether you generate it through your personal savings, a gift or loan from your parents or wider family, or a mixture of both.

3. Improve Your Credit Score

It doesn't matter what your budget is, if you don't have a good credit score you will struggle to gain approval for a mortgage.

For this reason, it would be worth obtaining a copy of your credit report to ascertain what your current standing is. If it is not favourable to securing a loan immediately, you will need to work on improving your credit score by paying bills on time and reducing any outstanding debts you have.

Essentially, it is within your interests to have as high a credit score as possible. Doing so will increase your chances of getting approval for a loan and help you secure lower interest rates – which can potentially save you thousands over the life of your mortgage.

4. Identifying Desirable Suburbs

We've all heard the saying 'location, location, location'. However, when it comes to buying your first home, the suburb in which you want to live is almost as important as the property itself.

For a start, narrowing down the neighbourhoods you want to live in can help you get a better handle on your budget, as different suburbs will have different median prices. But you should also consider the practicalities of living there, particularly if you intend to reside there for a significant period of time.

Consider factors like how far the neighbourhood is from your workplace and what the public transport and road links are like. Additionally, if you have children, or would like to start a family in the near future, you'll need to evaluate the standard of schools in the area.

Other aspects to consider are the general levels of crime it experiences, what amenities are in the suburb – particularly hospitals and medical services – and if there are any major structures, such as a sports stadium or music venue that could impact your living experience. Bear thought too, to the degree to which property prices have risen over a period of time and make yourself away from any future development plans in the pipeline.

If you are not familiar with them, visit the neighbourhoods you are interested in living in at different times of the day and night to provide you with a more accurate sense of what it is like to be a resident of them.

5. Stay Informed about Market Trends

Long before you actively start searching for a property, it is worth keeping yourself abreast with market trends for the suburb in which you want to live.

The real estate landscape is dynamic and influenced by certain factors such as economic conditions, interest rates and other market forces. So, you should try and stay informed as much as you can about historical, current and predicted market trends.

There are plenty of online resources and podcasts that will enable you to monitor the movement of interest rates and any shifts in property values. Tapping into them will help you better understand the market climate, make informed decisions and capitalise on favourable conditions as and when they arise.

6. Work with Real Estate Professionals

While it is good to get a feel for the local housing market on a general level, when the time comes to start looking for your first home, you should engage the services of a real estate professional.

Estate agents are experts who can significantly simplify the process of buying a home for you. They tend to have extensive knowledge of the local market, so will be able to quickly identify what properties are suitable for your needs. In addition, they can also guide you through negotiations, help with paperwork, and provide valuable insights into the current market conditions.

Before choosing a real estate agent, make sure you do your due diligence about them. Read customer reviews about them and search online for statistics on how many properties they have sold in the local area over the last year or so.

7. Get a Mortgage Broker

In the same way real estate professionals are experts in the local property market, mortgage brokers are experts in their own field.

The mortgage market is complex, comprising various loan types and interest rates, including fixed-rate mortgages, adjustable-rate mortgages, and even government-backed loans. However, mortgage brokers such as Get a Better Rate, can help you to find the best loan for you based on the terms, interest rates and down payment requirements you are prepared to undertake.

In short, mortgage brokers can save you thousands of dollars and a lot of the hassle of putting in an application. Best of all, you generally don't need to pay them, as they get a commission fee from the financial institution which approves your mortgage loan.

8. Homeownership Incentives

If you are a first-time homebuyer, you might be eligible to receive incentives like the First Home Owner Grant. This is a one-off, lump sum payment from the government that is designed to make homeownership more accessible and affordable.

There may also be tax incentives available, especially if you will be operating a business from your home, and other inducements at a state or federal level which you can use to your advantage. So, it is worth taking the time to see what potential assistance you might be eligible for.

9. Having a Bid Accepted

Eventually, you will find a property you like enough to put in a bid for - and after a bit of too-ing and fro-ing - that bit will be accepted. At that point, the final process begins.

This involves utilising the services of a conveyancing lawyer who will draw up the legal contract of sale to finalise the home purchase and transfer ownership. During this time, the lawyer will conduct any land and title searches that need to be done. You should also get a surveyor to examine the property to determine any potential issues there may be with it.

Generally, this process can take up to four weeks, during which time your financial lender will also facilitate the funds transfer to pay the seller once contracts have been completed.

Again, it is worth doing your research to establish a good lawyer by reading online reviews and asking for recommendations from family or friends. Once you have chosen the conveyancing lawyer you want to work with, make sure you get a full quote upfront for what their fees will be.

 10. Adding Value

Buying your first home is an exciting time in your life and you can't beat the feeling of opening the front door to it for the first time. However, once the dust has settled and you've moved in (or even before!), it is worth taking steps to add value to your home.

You can do this in several ways including building extensions such as extra bedrooms or a backdoor deck, upgrading the kitchen or garden or landscaping the garden. As well as increasing the value of your home, these refurbishments will also make it even more livable.

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