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Financial Planning Tips for First-Time Home Buyers in Australia

Writer's picture: Jaime BedoyaJaime Bedoya

Updated: Nov 19, 2024


First-Time Home Buyers

Gearing up to buy your first home? It’s a big step. The market has been turbulent, to say the least, and if you’re a first-time home buyer in WA, you are likely one of many feeling equal measures of excitement and stress. 


The process involves more than just finding the right property; it requires careful financial planning and an understanding of the available support. From saving for a deposit to securing the right loan and making the most of first-home buyer incentives, our experts at Aspire2Wealth Financial Advisers have compiled a quick guide with practical tips to help you navigate the journey.


 

First Home Buyers Tips #1: Saving a Deposit


Most people don’t have the finances to purchase their first home outright. As such, saving for a deposit is often the biggest hurdle for first-time home buyers in qualifying for a loan. 


So, how do you get started? 


Here are some actionable steps to help build your deposit faster:

  • Set a Savings Target: First, work out how much you need. Most lenders prefer a 20% deposit, but you can get started with as little as 5%—just be aware of potential costs like lenders mortgage insurance (LMI).

  • Create a Realistic Budget: Track where your money goes each month. Identify areas to cut back on, like dining out or streaming subscriptions, and funnel those savings directly into your deposit fund.

  • Use High-Interest Savings Accounts: Look for accounts that offer better interest rates to grow your savings quicker. Keep this account separate to avoid the temptation of dipping into your deposit fund.

  • Automate Your Savings: Set up automatic transfers to your savings account on payday. Automating this process helps you stay disciplined without having to think about it.


Saving for a home takes time, but every bit counts. With a clear plan and commitment, you’ll reach your goal.


 

First Home Buyer Tips #2: First home super saver scheme


The FHSS scheme helps you save for your first home by allowing voluntary contributions to your super fund.


Concessional contributions are taxed at just 15%, typically lower than your marginal tax rate. You also receive a 30% tax offset on the assessable FHSS amount.


You may be able to withdraw up to $15,000 from any one financial year, with a total limit of $50,000 across multiple years, including associated earnings.


This scheme is an effective way to boost your savings and enjoy tax benefits on your path to homeownership.


 

First Home Buyers Tips #3: Factor In Additional Costs


Don’t make the mistake of forgetting the string of other costs beyond the deposit when buying your first home. Far too many first-time home buyers in WA suffer from failing to realise the impact of additional expenses like:

  • Stamp Duty: Often one of the biggest upfront costs outside your deposit, stamp duty is a substantial fee based on the property's value. Some first-home buyer incentives in WA can reduce or eliminate stamp duty costs, but you must check your eligibility. 

  • Legal Fees: You’ll need a solicitor or conveyancer to handle the legal side of your purchase. The budget for these fees can range from a few hundred to several thousand dollars.

  • Building and Pest Inspections: It’s smart to get a building and pest inspection before you buy. These reports can help identify hidden issues that could cost you more down the road.

  • Home Insurance: Don’t forget about home and contents insurance to protect your new asset and secure your financial future.


Planning for these expenses can save you from unexpected financial stress and ensure you’re fully prepared for the costs of buying your first home.


 

First Home Buyers Tips #4: Explore Your Home Loan Options


First-home buyer loans are another common point of confusion. You encounter so many new details, criteria, options and conditions; choosing the right loan can feel next to impossible without the right support.


Here’s what you need to consider to get the best deal:

  • Fixed vs Variable Rates: Fixed rates lock in your repayments, providing certainty, while variable rates fluctuate with the market. Weigh the pros and cons of each based on your comfort with risk.

  • Offset Accounts: Some loans come with offset accounts that can help reduce your interest payments – a great feature for first-home buyers looking to save in the long run.

  • Low Deposit Loans: Consider low deposit loans if you have a smaller deposit. Be aware that these may come with higher rates or added costs like LMI.

  • First Home Buyer Loans: Many lenders offer special loans with reduced rates or fees for first-time home buyers. Shop around to find the best deal that matches your needs.


Finding the right home loan isn’t just about getting approved—it’s about securing a loan that suits your financial situation both now and in the future. 


Speak with an experienced financial broker to discuss your options.


 

First Home Buyers Tips #5: Get Pre-Approval


You can buy a property without pre-approval, so why is it on our list? 


Well, given how competitive the property market can be, obtaining pre-approval from your bank with your preferred first-home buyer loan gives you a clear idea of your borrowing power and shows sellers you’re serious. 


In receiving pre-approval, you will:

  • Know Your Budget: Pre-approval gives you a realistic view of what you can afford, allowing you to focus on homes within your price range.

  • Boost Your Negotiating Power: Sellers often prefer buyers with pre-approval because it reduces the risk of the sale falling through.

  • Speed Up the Buying Process: Pre-approval can make your home-buying journey smoother, allowing you to act quickly when you find the right property.


Remember, pre-approval typically lasts 3 to 6 months, so it’s best to get it when you’re ready to start house hunting.


 

First Home Buyers Tips #6: Explore All Available Grants & Concessions


With all the savings and planning out of the way, it’s time to look at the other side of the equation – first-home buyer incentives. 


Each first-time home buyer in WA can access several grants and concessions to make buying your first home more affordable.


These include:

  • First Home Owner Grant (FHOG): A grant offering $10,000 to eligible buyers purchasing or building a new home. It’s a fantastic boost to your budget and can be a game-changer for first-time home buyers.

  • Stamp Duty Concessions: First home buyer incentives in WA include concessions on stamp duty, which can save you thousands. Eligibility criteria apply, so make sure to check the current guidelines.


Make sure you explore all the available support to maximise your savings and benefits as a first-time home buyer.


 

Speak with Our Expert Financial Advisers for More Tailored Guidance


Still feeling unsure about the financial steps to buying your first home? 


Speaking with a financial adviser can help you navigate the complexities with personalised advice:

  • Personalised Planning: Our advisers can guide you through home-buying and ensure your financial plan aligns with your goals.

  • Budgeting and Savings Advice: From setting a realistic deposit goal to managing your money efficiently, we’ll help you make the right financial moves.

  • Maximising Grants and Concessions: We’ll ensure you take full advantage of all first-home buyer incentives and concessions available in WA.


Buying your first home is one of the biggest financial decisions you’ll make, so having expert support can make a significant difference. 


Reach out to us at Aspire2 Wealth Advisers today, and let’s work together to turn your homeownership dream into a reality.


 

 

Sources as at 9 October 2024:

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Aspire2 Wealth Advisers Pty Ltd.

Level 2,33 Richardson Street
West Perth WA 6005

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