Avoid These Common First Home Buyer Mistakes in Australia

Not Setting a Realistic Budget

One of the most common mistakes first home buyers make is failing to establish a realistic budget. It's essential to consider not just the purchase price but also additional costs such as stamp duty, legal fees, building inspections, and ongoing expenses like maintenance and council rates.

Practical Tip:

Start by calculating your borrowing capacity. Use online calculators or consult with a mortgage broker. Remember, lenders typically allow you to borrow up to 80% of the property's value without lender's mortgage insurance (LMI). Factor in your current financial commitments to avoid overstretching your budget.

Ignoring Government Grants and Incentives

Australia offers several government incentives to assist first home buyers, such as the First Home Owner Grant (FHOG) and stamp duty concessions. However, many buyers either overlook these opportunities or assume they're not eligible.

Practical Tip:

Research the grants and incentives available in your state or territory. Eligibility criteria can vary, so consult with a mortgage broker or financial advisor to maximise your benefits.

Skipping Pre-Approval

Entering the property market without a pre-approved loan can lead to disappointment. Pre-approval gives you a clear understanding of your borrowing limits and strengthens your position when making an offer.

Practical Tip:

Secure a pre-approval from your lender before house hunting. This process involves a credit check and an assessment of your financial situation, providing you with a conditional loan amount. Note that pre-approvals are usually valid for 3-6 months.

Overlooking Additional Costs

Beyond the purchase price, first home buyers often forget to budget for extra costs such as LMI, property inspections, and moving expenses. These can quickly add up and impact your financial plan.

Practical Tip:

Create a comprehensive checklist of all potential costs. Include both upfront and ongoing expenses to maintain a clear picture of your financial obligations.

Choosing the Wrong Loan Type

With various loan options available, selecting the wrong one can be costly. Fixed-rate, variable-rate, and split loans have different benefits and risks.

Practical Tip:

Assess your financial goals and risk tolerance. Fixed rates offer stability, while variable rates provide flexibility. A mortgage broker can help you compare products from multiple lenders to find the best fit.

How Esteb and Co Can Help

At Esteb and Co, we understand the challenges first home buyers face. Our experienced brokers provide personalised guidance to navigate the complex landscape of home buying. We assist in securing pre-approvals, understanding loan products, and ensuring you benefit from available grants and incentives. Partnering with us means you'll have expert support every step of the way, making your dream of homeownership a reality.