Things to Know Before Buying a Home: The Ultimate Guide for First Home Buyers in Australia
Buying your first home is a complex, multi-stage decision that combines finances, inspections, neighbourhood research, and emotional readiness.
This guide explains what you need to know before buying a home, offering a clear financial checklist, step-by-step home loan pre-approval guidance, practical tips for finding the right agent and property, and a due-diligence framework to protect your purchase.
Readers will learn how credit history, deposit choices, and borrowing capacity calculations influence home loan options, how to evaluate lenders and loan types, what inspections and legal documents matter, and how to manage settlement and post-purchase responsibilities. The article also answers common first-time buyer questions and addresses emotional challenges like decision fatigue and offer anxiety with tactical approaches.
Use the sections below—Financial Preparation, Home Loan Pre-Approval, Home Search and Offers, Due Diligence, Settlement and Post-Purchase Responsibilities, Common Questions, and Emotional Navigation—as a practical roadmap for the next steps in your home-buying journey.
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How Do I Prepare Financially Before Buying a Home?
Financial preparation before buying a home means understanding credit history, saving for a deposit, budgeting for ownership costs, and calculating borrowing capacity (serviceability) so lenders can evaluate your capacity to repay.
Preparing financially improves your loan options and lowers lifetime interest costs by enabling access to better rates and loan products. Start with a clear savings goal for deposit and settlement costs, an emergency fund for repairs, and a serviceability plan to reduce outstanding debts.
The next subsections quantify credit expectations, deposit scenarios, ongoing homeowner budgeting, and borrowing capacity calculations so you can turn financial readiness into actionable steps toward a successful purchase.
What Credit Score Do I Need to Qualify for a Home Loan?
Credit score ranges strongly influence which home loan products and rates are available to you; higher scores typically unlock lower interest rates and fewer Lenders Mortgage Insurance (LMI) requirements. Lenders often view lower scores as higher-risk, while scores above 740 are generally considered very favourable for standard financing.
Improving score factors—reducing revolving balances, paying bills on time, and correcting errors on credit files—can materially lower your projected monthly repayment. Aim to check your credit file early, dispute inaccuracies promptly, and focus on reducing high-interest consumer debt before applying. These actions set the stage for stronger pre-approval outcomes and better loan pricing in the next phase.
How Much Should I Save for a Deposit?
Your deposit size plays a key role in your home loan — it affects your monthly repayments, whether you’ll need to pay Lenders Mortgage Insurance (LMI), and which loan products or government schemes you may qualify for.
Most buyers fall into one of three main deposit tiers:
5% deposit: Available under the Australian Government’s Home Guarantee Scheme, which allows eligible first home buyers to purchase a home with as little as a 5% deposit without paying LMI. The government guarantees up to 15% of the loan amount.
10% deposit: Common for low-deposit home loans, but LMI typically applies unless covered by a scheme.
20% or more: Standard for traditional home loans, removing LMI and lowering your overall interest costs.
For example, on a $600,000 property:
A 5% deposit equals $30,000, which may qualify under the Home Guarantee Scheme.
A 10% deposit equals $60,000.
A 20% deposit equals $120,000, eliminating LMI and reducing monthly repayments.
You can build your deposit through personal savings, family gifts, or eligible government assistance programs. It’s smart to keep a small buffer aside for unexpected costs like repairs, moving expenses, or new furniture.
Saving intentionally for your deposit — while budgeting for stamp duty, legal fees, and settlement costs — ensures you’re financially ready to buy and comfortable once you move into your new home.
What is Stamp Duty and How Does it Affect My Purchase?
Stamp duty (also called land transfer duty) is a government tax you pay when buying a property. The amount depends on the purchase price, location, and whether you’re a first home buyer or an investor.
In Victoria, first home buyers may be eligible for stamp duty exemptions or concessions when purchasing a property valued up to $600,000, and partial concessions up to $750,000. This can mean saving of thousands of dollars in upfront costs.
For example:
If you buy a $600,000 home as a first home buyer in Victoria, you may pay no stamp duty under the current exemption threshold.
If the property is worth $700,000, you could still receive a concession, reducing your payable amount.
Stamp duty is usually due at settlement, so it’s important to factor it into your upfront costs when planning your budget. Even if you qualify for an exemption, always allow room for other one-off costs such as legal fees, bank charges, and moving expenses etc.
If you’re unsure how much stamp duty applies to your situation, you can speak to us to estimate your total upfront costs before committing to a property.
📞 Want to Know Your Exact Deposit and Stamp Duty Costs?
Every buyer’s situation is different — your deposit options, eligibility under the 5% Deposit Scheme, and stamp duty exemptions depend on several factors like income, location, and property type.
💬 Call us for a quick, obligation-free chat. We’ll help you work out your exact deposit requirement, stamp duty amount, and which first home buyer schemes you may qualify for.
How Do I Budget for Homeownership Beyond the Home Loan?
Budgeting beyond the home loan requires accounting for council rates, home and contents insurance, utilities, maintenance, and potential strata fees (body corporate fees). This ensures you can afford monthly carrying costs and irregular repair bills. A useful rule of thumb is to reserve roughly 1% of the home’s purchase price annually for maintenance, and to build an emergency fund equivalent to three to six months of housing expenses.
Create a monthly budget that includes home loan principal and interest, rates and insurance (often paid directly or via an offset account), utilities, and a maintenance reserve line item. Proper budgeting reduces the risk of deferred maintenance and financial stress after settlement, and it prepares you to evaluate true affordability when comparing properties.
What Is Borrowing Capacity (Serviceability) and Why Does It Matter?
Borrowing capacity (serviceability) is a primary lender metric used to determine home loan affordability and qualification. It assesses your ability to meet repayments based on your income and expenses. Lenders evaluate your borrowing capacity by comparing your income against your expenses and existing debt obligations—such as credit cards, student loans, and car loans—as well as projected home loan repayments.
While specific ratios vary, lenders generally look for a comfortable buffer to ensure you can manage repayments, often stress-testing at higher interest rates. Improving your serviceability can be achieved by paying down balances, increasing income, or reducing new credit obligations before applying. Knowing and improving your serviceability increases the range of home loan products you can access and strengthens your offers during competitive searches.
What Are the Essential Steps in the Home Loan Pre-Approval Process?
Home loan pre-approval verifies your basic financial qualifications, provides a conditional loan amount, and clarifies the documentation lenders require. It also signals seriousness to sellers during offer negotiations. A strong pre-approval includes income verification, asset confirmation, credit review, and a preliminary loan product recommendation based on your financial profile.
Comparing lenders on interest rates, fees, and product availability gives you leverage to choose an offer that minimizes long-term cost and suits your needs. Below are the practical steps to obtain a pre-approval, how to choose the right lender, a comparison of common loan types, and how interest rates affect repayments.
Before diving into the steps, here’s a concise comparison of common loan programs so you can see eligibility and trade-offs at a glance.
How Do I Get Pre-Approved for a Home Loan?
Getting pre-approved is one of the most important early steps in your home-buying journey. It shows sellers and agents that you’re a serious buyer and gives you a clear idea of how much you can afford.
To get pre-approved, you’ll need to provide key documents such as:
Recent pay slips and PAYG summaries or tax returns
Bank statements showing savings and expenses
Identification (e.g. driver’s licence, passport)
The lender will verify your income, employment, assets, and credit history — and run a full credit check. Based on that, they’ll issue a conditional pre-approval letter outlining your borrowing limit and estimated rate.
Pre-approval is typically valid for 60–90 days and may change if your financial situation or interest rates change. It’s stronger than a pre-qualification because it’s supported by documentation and credit checks.
Tips for a smooth pre-approval:
✅ Gather your documents before applying.
✅ Compare multiple lenders for interest rates, fees, and service.
✅ Request a written pre-approval letter and confirm any conditions or expiry dates.
Having a clear pre-approval positions you competitively when making offers and reduces surprises later in the loan process.
How Do I Choose the Right Home Loan Lender?
Choosing the right lender can make a big difference to your overall experience and costs. It’s about more than just the interest rate — you should also compare fees, service quality, and loan flexibility.
When comparing lenders, request a Key Facts Sheet or Loan Offer from each one. This helps you evaluate:
Interest rates and comparison rates
Upfront and ongoing fees (e.g. application, settlement, package fees)
Rate-lock or redraw options
Underwriting speed and customer service responsiveness
You can apply directly with a lender or work with us, where we compares options across 25+ lenders and negotiates on your behalf.
Before you choose:
✅ Get quotes from at least three lenders or compare options through a broker.
✅ Confirm expected approval timelines.
✅ Check if any fees are refundable if your loan doesn’t proceed.
Working with the right lender or broker ensures a smooth path from pre-approval to settlement, with fewer delays and hidden surprises..
What Types of Home Loans Are Available and Which Is Best for Me?
There’s no one-size-fits-all home loan — the right option depends on your financial goals and personal circumstances.
Common home loan types include:
Variable rate loans: The interest rate can change with market conditions, offering flexibility.
Fixed rate loans: Your rate and repayments stay the same for a set period, offering stability.
Interest-only loans: Common for investors; you pay only the interest for an initial term.
Principal and interest loans: The most common type for home buyers, reducing your loan balance over time.
For example:
A first-home buyer with a smaller deposit might consider a low-deposit loan (possibly with LMI or under the 5% Deposit Scheme).
A buyer with a larger deposit might choose a standard principal and interest loan for lower long-term costs.
Discuss options with your broker to align your loan type with your budget, deposit, and long-term financial plans.
How Do Interest Rates Affect My Home Loan Repayment?
Interest rates directly influence both your monthly repayments and the total interest paid over the life of your loan. Even a small rate change — say, from 5.5% to 6% — can add hundreds per month and tens of thousands over the full term.
When comparing loans, always look at both:
Nominal interest rate: The base rate charged by the lender.
Comparison rate: A more accurate measure that includes most fees and charges.
Example:
A $600,000 loan over 30 years at 5.5% has a monthly repayment of around $3,407 approx.
At 6%, it increases to about $3,598 — a difference of $191 per month, or $68,760 approx. over 30 years.
If rate movements concern you, consider a rate-lock option or split loan (part fixed, part variable). Understanding how interest rates affect repayments helps you plan ahead and make informed decisions.
📞 Ready to Get Pre-Approved or Compare Your Options?
Every borrower’s situation is different — your borrowing capacity, deposit requirement, and interest rate depend on your income, savings, and eligibility for government schemes.
💬 Call us for a friendly chat.
We’ll help you:
Work out exactly how much you can borrow
See if you qualify for the 5% Deposit Scheme or First Home Buyer concessions
Compare rates and lenders to find the right fit
Whether you’re buying your first home or planning ahead — talk to us today and make your next step a confident one.
How Do I Find the Right Home and Real Estate Agent?
Once you’ve worked out your budget and secured pre-approval, the next step is finding the right home — and the right real estate agent to guide you through the process.
As a first-time buyer, this stage can feel overwhelming, but having a clear plan and the right people on your side makes all the difference.
What Should I Look for When Researching Neighbourhoods?
Start by narrowing your search to areas that suit both your lifestyle and your budget. Focus on practical factors that affect daily life and long-term value:
📍 Commute and transport: Check travel time to work, public transport access, and main roads.
🏫 Schools and amenities: Research school zones, parks, and shopping centres.
🛠️ Local development: Look for council plans that may improve or impact the area.
📊 Market trends: Review recent sales and price growth to understand local demand.
Taking the time to compare suburbs helps you choose a location that fits your current needs while offering solid resale potential later.
How Do I Choose a Reliable Real Estate Agent?
A good agent helps you find the right property, understand fair pricing, and negotiate effectively. When speaking with agents:
Ask about their local experience and recent sales.
Check their communication style and how they handle offers.
Look for honesty and responsiveness — two key signs of professionalism.
Avoid agents who overpromise or pressure you to move quickly. The right agent should make the process easier, not more stressful.
What Questions Should I Ask When Viewing a House?
When inspecting a home, go beyond looks — focus on condition and potential costs:
Ask about the age of the roof, heating, and plumbing systems.
Check if any renovations were approved with permits.
Look for signs of water damage, cracks, or electrical issues.
Review seller disclosures and request a building and pest inspection before committing.
A careful inspection helps you avoid unexpected repair bills and strengthens your position when making an offer.
How Do I Make a Competitive Offer on a House?
When you’ve found a property you love, your offer should balance price and conditions.
Have your pre-approval ready — it shows you’re a serious buyer.
Confirm deposit amount, settlement date, and any special conditions (like finance or inspection clauses).
In competitive markets, flexibility on settlement or deposit terms can help your offer stand out.
Always discuss strategy with your agent or broker before signing — and never remove important protections without advice.
📞 Need Help Planning Your First Home Purchase?
Wizely can guide you through every step — from pre-approval to finding the right property and settling with confidence.
💬 Call us for friendly, expert guidance.
We’ll help you:
Identify areas that fit your budget and lifestyle
Connect with trusted real estate professionals
Understand how much you can borrow and what deposit you’ll need
Your first home journey is easier — and a lot less stressful — when you have the right team beside you.
What Due Diligence Is Needed Before Buying a Home?
Due diligence protects you from unexpected structural, financial, and legal issues before you buy. It includes arranging a building and pest inspection, a valuation, a conveyancer or solicitor review, and checking all seller disclosures carefully.
Proper due diligence ensures your property meets lender requirements, aligns with your contract conditions, and gives you the right to renegotiate or withdraw if major issues arise.
The key steps below explain how inspections, valuations, and legal checks help you buy with confidence and avoid costly surprises.
Why Is a Building and Pest Inspection Critical Before Purchase?
A building and pest inspection helps identify any hidden issues — such as roofing damage, foundation cracks, plumbing or electrical faults, or pest infestations — that you may not notice during an open inspection.
Inspectors provide a detailed report outlining defects, safety risks, and estimated repair costs. You can use these findings to:
Request repairs or credits from the seller
Renegotiate the purchase price
Decide whether to proceed or walk away if the problems are serious
For specific concerns like termites, mould, or sewer issues, consider hiring specialised inspectors.
Prioritising this step protects your investment and helps you make informed decisions before signing unconditional contracts.
How Does the Home Valuation Process Work?
A property valuation confirms the market value of the home and ensures it supports the loan amount being requested. Lenders use this valuation to assess risk before issuing final approval.
Valuations are not arranged by buyers directly — they’re ordered by your lender (through your mortgage broker) once your application is submitted. Lenders use a few different methods depending on the property and loan type:
Automated Valuation Models (AVMs): Instant, data-based estimates using recent comparable sales — typically used for low-risk or metro properties.
Desktop Valuations: A valuer assesses data and photos without visiting the property.
Full Valuations: A licensed valuer physically inspects the property and provides a detailed written report.
The lender (via the broker) manages this process using their internal valuation ordering platform, so you don’t have to arrange anything yourself.
If the valuation comes in lower than your agreed purchase price, you can:
Ask your broker to request a revaluation with additional comparable sales;
Renegotiate the purchase price with the seller; or
Increase your deposit to cover the shortfall.
Understanding how lenders conduct valuations — and what factors influence the final figure — helps set realistic expectations and prevents surprises during final loan approval.
What Legal Documents and Disclosures Should I Review?
Always review key legal documents before signing:
Contract of Sale
Vendor or Seller Disclosure Statements
Title Search (checking for easements or restrictions)
Strata Reports (for units or townhouses)
Environmental or zoning reports, where applicable
A conveyancer or solicitor can help you check these documents for hidden risks, such as:
Easements or boundary issues
Unresolved title defects or legal disputes
Strata fees or upcoming special levies
A thorough review ensures your contract protects your interests and prevents unwanted surprises before settlement.
What Are Settlement Costs and How Are They Calculated?
Settlement costs are the final out-of-pocket expenses due before ownership transfers. These typically include:
Lender fees
Conveyancing or solicitor fees
Stamp duty and registration fees
Prepaid council rates and insurance
Any seller concessions or adjustments
For most buyers, these total around 3–8% of the property price, depending on stamp duty and lender fees.
Your lender’s Key Facts Sheet or Loan Offer outlines estimated costs upfront. Before settlement, your conveyancer will issue a Settlement Statement showing the final figures due.
Be sure to verify every line item and have your funds ready — either by bank transfer or bank cheque, as directed by your conveyancer. A clear understanding of these costs prevents last-minute funding issues and ensures a smooth settlement day.
📞 Want to Know How Much the Bank Thinks Your Property Is Worth?
Before you make an offer, get an idea of what your lender’s valuation might come in at.
💬 Call us to request a free property valuation check through our broker valuation tools.
We’ll help you:
See how lenders may value your chosen property
Understand how valuation affects your borrowing power
Plan your deposit and loan structure confidently before you buy
Get clarity on your property’s value — and make your next move with confidence.
What Should I Know About Settlement and Post-Purchase Responsibilities?
Settlement is the final step of your home-buying journey — when ownership officially transfers to you. It’s also when your post-purchase responsibilities begin: activating insurance, managing council rates, maintaining your home, and setting up a budget for future repairs or improvements.
Managing this stage properly ensures a smooth transition into homeownership and helps you avoid last-minute delays or unexpected costs.
How Do I Understand and Manage Settlement Costs?
Before settlement, your conveyancer or solicitor will provide a Settlement Statement, listing the final amounts due — including your deposit balance, stamp duty, lender fees, and government charges.
Compare this carefully with your Key Facts Sheet or Loan Offer to spot any discrepancies. Ask your lender or broker to explain unexpected fees or third-party charges — and request waivers where possible.
Tips for smooth settlement:
✅ Confirm how you’ll transfer funds (bank transfer or bank cheque) well before the due date.
✅ Review your property one last time to ensure all agreed repairs or inclusions are complete.
✅ Keep all settlement and loan documents safely stored for future reference.
Good preparation ensures funds arrive on time and the property settles without stress.
What Does Home and Contents Insurance Cover and Why Is It Necessary?
Your lender will require home insurance (also called building insurance) to be active from the day of settlement. This protects both you and the bank if the property is damaged or destroyed.
Typical home and contents insurance covers:
🔹 Structural damage to the building
🔹 Personal belongings inside the home
🔹 Legal liability if someone is injured on your property
🔹 Temporary accommodation if the home becomes uninhabitable
Choose coverage based on replacement value, not just market value, and consider adding cover for flood, storm, or earthquake if those risks apply in your area.
Shop around for competitive quotes and consider bundling policies to save on premiums.
Having the right insurance gives you peace of mind and protects your biggest investment.
How Are Council Rates Assessed and Paid?
After settlement, you’ll start receiving council rate notices, which cover local services like waste collection, roads, and community facilities.
Rates are calculated based on your property’s land value and local council budget, and are usually billed quarterly or annually. You can pay:
Directly to your local council, or
Through your lender’s offset or escrow arrangement (if applicable)
Set reminders for due dates and factor potential increases into your ongoing budget. Understanding how your rates are calculated prevents missed payments and helps with long-term financial planning.
What Are Essential Home Maintenance Tasks After Buying?
The first year in your new home is the perfect time to set good maintenance habits. Preventative care helps protect your property’s value and reduces costly repairs later.
Start with these essentials:
Test and replace smoke and carbon-monoxide detectors.
Service your heating, cooling, and hot water systems.
Inspect the roof, gutters, and drainage for leaks.
Seal windows and doors to improve energy efficiency.
Keep a maintenance fund for unexpected repairs and small upgrades.
Keep all warranty and service receipts — they’re useful for insurance claims and resale value. Regular upkeep means fewer surprises and more comfort in your new home.
❓ Frequently Asked Questions
What Are the Common Mistakes First-Home Buyers Make?
Many first-home buyers make similar mistakes that can affect their experience and finances.
Common pitfalls include:
❌ Not researching the property or neighbourhood thoroughly — leading to surprises later.
💸 Underestimating total costs such as maintenance, insurance, and council rates.
🏦 House hunting without pre-approval, which can lead to disappointment or delays.
❤️ Letting emotions drive decisions, resulting in overpaying or compromising on key needs.
Being aware of these challenges helps you stay grounded, plan better, and make confident decisions throughout the buying process.
💳 How Can I Improve My Credit Score Before Buying a Home?
A strong credit score can improve your borrowing power and unlock better interest rates. Here’s how to prepare before applying:
🧾 Check your credit report and dispute any errors.
💰 Pay down existing debts, especially high-interest credit cards.
⏰ Pay bills on time — your repayment history has a major impact on your score.
🚫 Avoid new credit applications in the months leading up to your home purchase.
👥 Consider becoming an authorised user on a responsible person’s card to build positive credit history.
Improving your score even slightly can make a big difference in your loan approval and rate.
🏡 What Should I Know About Home and Contents Insurance?
Home and contents insurance protects your investment and gives you peace of mind. It typically covers:
🏠 Structural damage to the home
💼 Personal belongings
⚖️ Liability for injuries on your property
🏚️ Temporary accommodation if the home becomes uninhabitable
When comparing policies, pay attention to coverage limits, exclusions, and excess amounts.
Standard policies often exclude flood or earthquake, which may need separate cover. Always review quotes and coverage carefully before settlement — your lender will require proof of insurance.
🧭 What Are the Benefits of Using a Mortgage Broker?
A mortgage broker simplifies the lending process by comparing multiple lenders and products for you.
Key advantages include:
We have access to 25+ lenders and competitive rates
Expert guidance on loan structures and deposit options
Handling all paperwork and lender communication
Tailored advice for first-home buyers unfamiliar with the process
Working with a broker saves time, reduces stress, and ensures you’re matched with the most suitable home loan for your needs.
🧱 How Do I Prepare for a Home Inspection?
A home inspection helps you understand the true condition of the property before committing.
To prepare effectively:
📝 Create a checklist — focus on the roof, plumbing, electrical, and foundation.
🕵️ Attend the inspection if possible to ask questions in real time.
🚪 Ensure the inspector can access all areas (attic, basement, etc.).
📑 Review the final report carefully and discuss major issues with your broker or solicitor.
A thorough inspection gives you negotiation leverage and prevents unpleasant surprises after purchase.
💰 What Should I Know About Closing (Settlement) Costs?
Closing costs are the final fees paid when the property officially transfers to you. They typically range from 2–5% of the purchase price and may include:
Loan establishment or origination fees
Valuation and conveyancing fees
Stamp duty and registration fees
Title insurance and legal costs
Ask your lender or broker for a detailed Settlement Estimate early in the process. Some costs are negotiable, and sellers may agree to cover certain items in your contract.
Understanding these costs helps you plan your finances and avoid last-minute settlement stress.
📞 Ready to Buy Your First Home?
Buying your first home is exciting — but there’s a lot to consider.
💬 Call us for a friendly chat.
We’ll help you:
Understand your full home-buying costs
Confirm your borrowing capacity and deposit options
Check your scheme eligibility (5 % Deposit / First Home Guarantee)
Compare loan options across 25+ lenders
Get step-by-step support from pre-approval to settlement
With Wizely by your side, your first home journey is simpler, clearer, and stress-free.
