Buying your first home is very exciting and is probably the biggest purchase you will ever have to make.

To help you get started, we have put together a list of questions that should be considered as you prepare to buy your first home.

How much the banks/lenders will allow you to borrow depends on two main factors
  1. your household income
  2. your commitments (current loans, leases & credit cards)

Each bank/lender has a mathematical formula to determine the maximum amount it will lend you.

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The amount a bank is prepared to lend you may be inconsistent with the amount you are comfortable borrowing. It is vital that you work out for yourself what loan repayments (and in turn what loan size) you will be comfortable repaying both now and in the future.

A good way to work out what you can afford is to set up a budget for all your expenditure. It will help you assess what you can afford now. Alternatively, you can calculate how much you need to cut from your existing spending to afford the new home you desire.

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In most cases, lenders want you to contribute at least 5% of the purchase price plus cover the additional costs associated with buying a property.

With some lenders, your contribution does not need to be your own savings. It can be a gift from your family or even borrowed funds.

First home buyers are entitled to a one-off federal government grant of $7000 which is typically received upon settlement of the home loan.

For more information visit the government's first home owners grant website. To find out if you qualify for the First Home Owner's Grant you can go through the First Home Owner Grant questionnaire with your adviser.

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