The 11 questions every first home buyer should ask themselves

The 11 questions every first home buyer should ask themselves
The 11 questions every first home buyer should ask themselves

If you're looking at buying a first home, or perhaps a first investment property, there are many hoops to jump through.

For those of you who have just started considering and becoming serious about purchasing, here are 11 questions that you should be looking at answering for yourself - including links to more helpful information.

If there's a question you'd like assistance with, or answered, then leave a comment and Property Observer will take it to the experts.

  1. What time frame am I looking at?

    If you’re looking to buy within the next month, then you need to ensure that you have everything in order, including your deposit and funds for costs as well as any auction practice or professionals you need to have engaged.

    If you have longer, then you are able to save more – and put a budget plan into place as necessary – and spend more time to research. Your personal time frame will shape how you approach the other questions in this list.

  2. Who should I speak to for advice?

    There are many professionals out there, and you’d be wise to engage with an accountant, broker and potentially even a buyer’s agent early on in the piece – not to mention start to scope out real estate agents (though remember, they work for the vendor not for you).

    You will also want to eventually grow your team to include either a solicitor or a lawyer, perhaps a building and pest inspector and so on. You can see a
    number of articles on how to choose these experts here.

  3. What deposit do I have?

    If you have a small deposit, it’s time to understand LVRs and how LMI might play a factor in this. This may cause you to re-think how much money you’re putting in, and perhaps have you saving for longer. Remember, also, that you will also need funds to cover all those extra hidden costs.

  4. How much can I borrow?

    An online calculator can quickly help with rough estimates around what you can borrow. A broker can further assist you with this. Knowing this figure, the bank’s limit, can quickly help you understand what is out of your reach. You can also ask your broker what you can do to push this limit up if it comes in too low (for instance, increasing earnings and minimising expenditure). Here are some other tips on improving serviceability.

  5. How much can I afford?

    Just because the banks are willing to give it to you, it doesn’t necessarily mean that you can service the debt and maintain your lifestyle. Now is time to practice putting aside the repayment amounts, and factoring in aspects such as interest rate increases, to see if you can really afford it.

    Speak to your mortgage broker about the importance of buffers and not overstretching yourself financially.

  6. What type of property am I looking at?

    Are you looking for a run down property to renovate, or a new build? An apartment or a house? How many bedrooms?

    Get a clear picture in your mind about the type of property you’re after, and what you’ll need for your own situation.

    For some with pets, a garden is non-negotiable. For those with children on the way, consider how long you may need to be in this property for and the space available.  

  7. What suburbs am I interested in?

    Now look to the areas that you are keen to live in. Look at what is selling and the prices, and see whether what you can borrow matches up with the area and the type of property you need. If not, see the next question. You can check the median prices and movements with our free suburb data here.

  8. Which factors am I prepared to negotiate on?

    It’s time to do some compromising with yourself or some sacrificing. Could you go a couple of suburbs further away where it becomes cheaper? How about a smaller property? If you can’t afford it, sadly you’re going to need to compromise.

    Perhaps the compromise is waiting for longer until you can afford it. This is a growing reality for first home buyers – just remember, it’s your first home, not your last.

  9. Do I need pre-approval?

    If you’re looking to head to an auction soon, or would just like some peace of mind, have a pre-approval at the ready. Be wary of the limitations around these documents as explained here in this quick guide to pre-approvals.

  10. Have I thought about the risks?

    Taking on any amount of debt comes at a risk to you, and with a substantial amount of debt comes a substantial amount of risk.

    While you may have heard the term “safe as houses”, buying a property leaves you open to the mercy of the market.

    You need to be prepared for any eventuality that may affect your financial situation. This includes, but is of course not limited to, losing your job, becoming sick, perhaps having a child, damage to the property, divorce, death and so on.

    Prepare insurances adequately, and ensure you have a clear understanding of what you’re purchasing.

    Here are some examples of off-the-plan risks, and here are 10 risks that first time investors need to overcome.

  11. What grants and assistance are available to me?

    Lastly, look into what is currently available to you in terms of first home buyer grants and stamp duty exemptions.

    These are easily accessed by your state or territory’s office of state revenue or treasury, however you can also
    see our cheat sheet guide here. They regularly change, so ensure you seek careful advice.


Letter from the editor: FHBs, if you’re not wealthy, you will have to compromise

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

First Home Buyers

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