First Home Buyers

Buying your first home

First things first! What's your borrowing power?

First things first! What's your borrowing power?

“How much can I borrow” is probably one of the first questions you’ve asked yourself, and there’s no simple answer to this question as it all comes down to your personal financial situation. Lenders will measure your ability to make loan repayments comfortably without putting you in financial hardship. This is called a debt-to-income ratio (DTI) or loan-to-income ratio (LTI).

You’ll also hear this term a lot – loan-to-value ratio (LVR). This describes the amount you need to borrow to buy a particular property. Generally, the lower the LVR the better, as a lower LVR carries less risk.

It also means you’ll have a head start on fully owning your home and have more equity from the get-go (equity is the market value of your property less how much you owe on it).

When your LVR is over 80%, the cost of getting a home loan may increase because you might need to pay for Lenders Mortgage Insurance (LMI). LMI protects the lender if you can’t keep up with your home loan repayments. Even though you’re paying for this insurance, it’s not protecting you. It only protects the lender. So generally, the higher your LVR, the more LMI will cost. But more on LMI coming up.


Get an Approval in Principle

Get an Approval in Principle

To help you understand the maximum amount you’ll be able to borrow from a lender, you should ask for an Approval in Principle (also called pre-approval or conditional approval). Generally, it shouldn’t cost you anything and you need to know that it’s no guarantee to getting a home loan. What it does do is give you an idea of how much you can borrow, so you can narrow your house hunting and help with your budgeting.

Once you’ve got an Approval in Principle, it’s valid for 90-days from when it was approved. If it lapses before you’ve signed a contract on a house, you’ll have to re-apply. Make sure you ask your lender or broker about the AIP renewal policy.

Time to start house hunting

Time to start house hunting

Once you’ve got your finances sorted, it’s time to start the exciting part – finding your dream home! This is the part where you’ll be scrolling various real estate sites a few times a day, heading along to countless inspections, or visiting a number of display homes to find the right one. This part can seem overwhelming but remember, searching is half the fun!

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Top Tip

Don't discount the up and comers!


Choosing a location

It’s the million-dollar question for all house hunters, not just first home buyers. How do you choose the right suburb to buy in? There’s no right or wrong answer, but there is a well-tested formula. First, know what you can afford without it affecting your lifestyle too much. You still want to be able to go out occasionally and have a holiday each year! The next is considering ‘the village’ of a suburb – the shops, where you might walk to for a coffee, transport links, hospitals and public transport options.

Even if you’re not considering a family right now, it’s wise to factor in school zones and childcare options, especially with childcare centres experiencing long waiting lists. Another thing to consider is the demographics of a suburb. What’s the unemployment rate like? What will your insurances cost? What will your council rates be?

Lastly, be open! While that blue-chip suburb may not be on the cards right now, a house and land package in a new master-planned community may be very achievable and a good first step on the property ladder.

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Top Tip

Only ever buy what you can afford in your current financial situation


What you want versus what you need

House hunting is exciting. But before you jump in, you need to know your non-negotiables and recognise the wants. Remember, every extra feature or room you want adds a cost to your mortgage. You might find it helpful to make a list and ask yourself, do you really need the fifth bedroom and third bathroom, or can it wait for the next home? Identifying the essentials could save you money and stop you wasting time looking at the wrong houses.

Potential resale should also be front of mind. It’s easy to let emotions take over when looking for a home to live in, but be conscious of the location, return, desirability and resale value of the home you’re looking at. Things like a north-facing orientation, great floorplan, size, security, privacy, and of course, scarcity, all add value to your home.

The right type of property

The right type of property

Generally speaking, you’ll have a more restricted budget than other buyers so it’s good to try to remember your first home might not be your forever home.  Instead, think about what will suit you for the next 5-7 years.  Here’s a few options that our first home buyer clients love:

House and Land: Located in key growth areas in communities throughout Victoria and Queensland, our house and land packages are all fixed price so there’s no surprises. Available as a single or double-storey home with 3-4 bedrooms, they suit couples right through to families.

Townhomes: These are low maintenance homes with functional, well thought out floorplans. With anywhere between 2-4 bedrooms, they are spacious, include everything you need to move in and are all at a great price point.

Porter Davis Real Estate: These properties are ready to move into in 90 days or less. They’re good for buyers who are leaning towards an established home but still like the idea of something brand new.

Or, simply get inspired by our house designs! If you’ve got land or are planning on buying land, this could be a great place to start.

Check the property before you buy

Check the property before you buy

If you’re buying established, you should always check the property carefully before you buy. If you discover problems with the property after an offer goes unconditional, you may not be in a position to have them rectified. A building inspection report will cover everything from roof, walls and ceilings, any signs of cracks or signs of erosion, plus electrical wiring and plumbing.

Don't go it alone

Don't go it alone

At Porter Davis, our team is on hand to guide you through the home buying process from start to finish. From our New Home Consultants during the sales process to your dedicated Building Coordinator, Interior Designer and Construction Supervisor working with you to get those keys. So no matter where you are – be it renting or living at home – we are positioned to help you take the next step.

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