Buying your first home

So you’re ready to take the leap and become a homeowner! From understanding your finances to finding the perfect place, we’ll walk you through the ins and outs of purchasing your very first home.

Looking to invest? Everything you need to know is over this way.

Now that you’re clear on what you want from your first home, it’s time to figure out how much you can afford to borrow and repay.

It can be easy for first home buyers to put all their focus into the deposit. While this is definitely important, you also need to make sure your budget takes into account the ongoing cost of a loan.

As a general guide, repayments on your new home shouldn’t be more than 30% of your take-home salary. And to avoid financial pressure, your home should cost no more than 3 to 5 times your household income.

Here are some questions to think about:

• What is your salary now and is it likely to change in the future?
• Do you have any other debts to repay on a regular basis?
• How will your credit score affect your borrowing options?
• What are your expenses outside of home ownership?
• How would increasing or decreasing repayments impact you?

Remember, as a first home buyer, you can also access a range of government initiatives to help get you into your first place.

After you’ve paid the deposit and purchased your home, it’s time to sort out your home loan.

You’ll likely have pre-approval from a bank already, but that doesn’t mean you’re locked in. Depending on your situation, chances are you still have some flexibility to discuss the features of your loan, and potentially shop around.

Here are some things to think about when deciding on what home loan would work for you:

• Do you want a fixed or variable rate?
  A fixed loan can give you confidence about repayment amounts, while variable rate loans can have more flexible features – or consider a split loan, which can be the best of both.
• Do you want offset or redraw facilities?
  Keeping money in a linked offset account can help you save on interest. Meanwhile, a loan with redraw facilities can give you access to any extra repayments you’ve made.
• Will you make principal and/or interest payments?
  It’s generally better to repay both your interest and the principal. But if you’re buying an investment or need a little more short-term flexibility, you can choose interest-only repayments.
• How often do you want to repay?
  The ability to make weekly or fortnightly repayments can help you save on interest long-term. But be careful, some loans will charge an extra fee for this flexibility.
• What about extra repayments?
  Making additional repayments is one way to reduce the interest you pay and the life of your loan – however some home loans limit the amount of extra repayments you can make.

Now that the money stuff is mostly taken care of, it’s time to focus on settlement logistics. While you’re sorting out your loan, you’ll also be working with your conveyancer to make sure everything is ready for the official handover.

As you near your settlement date, you’ll need to do a pre-settlement inspection. This is your chance to do a walkthrough of the property and make sure everything is as agreed in your contact. You should also organise for your utilities to be connected in time for when you move in.

And that leads us, finally, to settlement day. Your conveyancer and lender will meet with the seller’s team to sort out the financials and legal documents. Then you’ll meet up with the agent for the keys for your very own home!

Bust out the bubbles, because you’re now a home owner!

Take some time to celebrate and enjoy the moment. If you ask us, getting your nearest and dearest over to test out some local takeaway is a great way to kick off this next chapter.

Now, this will be a very exciting time, but also an overwhelming one. Here are a few things to think about as you settle in:

• Make sure your salary is going into the right account – especially if you’ve got an offset account
• Arrange for your mail to be redirected, and let everyone you can think of know about your new address
• Expect your first repayment to be due a month after settlement, and make sure to set up an automatic transfer
• Sort out some building and/or contents insurance to protect the new life you’re building

Once you’ve cleared the pizza boxes and vacuumed the confetti, it’s time to start thinking about life after home buying!

As you settle into new habits and routines, don’t forget to factor finances into the equation.

Here are a few tips and tricks for life after your big purchase:

• Get your head around your new finances by setting up online banking and downloading the Hume Bank app
• If you’ve got an offset account, get in the habit of using it as soon as possible to start saving on interest
• Set up direct deposits for utilities, insurance and other bills where you can
• Think about opting into digital or paperless statements – the environment will thank you for it!
• Consider ways to pay off your loan sooner and restart your saving journey