First Home Buyer - Top Ten Questions Answered with Sonia

Buying your first home comes with a lot of questions, and it's rarely as simple as "how much can I borrow?" Over the years, I've found there's a handful of questions that come up again and again from first home buyers here on the Coffs Coast  so I've put together the answers here as a starting point. Every situation is different, so think of this as a general guide rather than the full picture for your circumstances.

‍1. How much can I borrow?
Your borrowing capacity depends on your income, existing debts, credit card limits, living expenses, dependants and the lender’s assessment criteria. I can calculate your borrowing capacity across different lenders and, importantly, work out a comfortable purchase price rather than simply the maximum available.

2. How much deposit do I need?
Traditionally, a 20% deposit avoids Lenders Mortgage Insurance (LMI), but you may be able to purchase with a much smaller deposit. Eligible first home buyers may also be able to access the Australian Government’s 5% Deposit Scheme, subject to the current eligibility and property-price requirements.

3. What other costs do I need besides my deposit?
You should allow for costs such as stamp duty (if applicable), conveyancing/legal fees, building and pest inspections, bank or loan fees, moving costs and adjustments at settlement.

4. Do first home buyers pay stamp duty in NSW?
Eligible first home buyers in NSW may receive a full exemption or concessional rate depending on the property's value and the rules applying at the time you purchase. I recommend checking the current Revenue NSW thresholds when you're ready to buy.

5. Should I get pre-approved before looking at properties?
Ideally, yes. It gives you a clearer budget and means you can look at properties within a realistic price range. It can also put you in a better position when you're ready to make an offer. This varies between lenders, but it's commonly around 90 days. If it expires, the lender may require updated documents or a new assessment.

6. What's the difference between fixed and variable rates?
A variable rate can move up or down and often provides more flexibility. A fixed rate locks in your interest rate for an agreed period, giving you certainty with repayments, but it can have restrictions. We can compare both options based on your circumstances.

7. What's the difference between offset and redraw?
An offset is a separate transaction account linked to your loan. Redraw is generally money you've paid into the loan above your required repayments that you may be able to access again, subject to the lender's rules.

8. What happens once I find a property?
I can update your figures based on the purchase price, arrange the finance application or move from pre-approval toward formal approval, and work with you through the finance process toward settlement. You'll also need your conveyancer or solicitor involved with the contract and legal side of the purchase.

9. What's the biggest mistake first home buyers make?
Often it's focusing only on the maximum amount they can borrow. I like to also look at the actual monthly repayments, your lifestyle and how your budget would cope if interest rates or expenses increased.

10. Why should I use a mortgage broker instead of going directly to my bank?
A broker can assess your circumstances and compare suitable options from the lenders available on their panel rather than looking at just one bank. The cheapest advertised rate isn't always the best option—borrowing capacity, fees, features, policy and your longer-term plans also matter.

Ready to Talk It Through?

Buying your first home is a big step, and no two buyers' situations look the same. If any of these questions raised more questions of your own, or you'd just like to talk through where you're at, I'm always happy to help reach out and we can get started.

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