Avoid These 7 Mistakes When Buying Your First Home

Buying your first home in Hawthorn can feel overwhelming, but having the right checklist makes all the difference. As experienced mortgage brokers at LBK Lending, we've helped countless first-time buyers turn their property dreams into reality. Here's your comprehensive guide to avoiding common pitfalls and making informed decisions.

Understanding Your Financial Situation

Before you start house hunting, take a close look at your finances. This means:

• Calculating your borrowing capacity based on income and expenses
• Reviewing your credit history and addressing any issues
• Gathering bank statements from the past three months
• Understanding your loan to value ratio (LVR) and how it affects your loan amount

Many first-time buyers underestimate additional costs like stamp duty, building inspections, and conveyancing fees. In Victoria, stamp duty can add thousands to your purchase price, so factor this into your budget early.

Exploring First Time Home Buyer Programs

As a first-time buyer, you have access to several government schemes designed to help you enter the property market:

First Home Owner Grants (FHOG): Victoria offers grants for eligible new home purchases

Home Guarantee Scheme: This federal program allows you to purchase with as little as 5% deposit without paying lenders mortgage insurance (LMI)

First time home buyer schemes: Various state-based programs offer stamp duty concessions and other benefits

These packages can save you thousands of dollars, but eligibility criteria vary. It's worth understanding which programs apply to your situation before you start shopping.

Getting Pre-Approved for Your First Home Loan

Securing pre-approval should be one of your first steps. This process involves:

1. Submitting a formal application to potential lenders
2. Providing documentation of your financial situation
3. Receiving conditional approval for a specific loan amount
4. Understanding the interest rate and loan terms offered

With access to home loan options from banks and lenders across Australia, mortgage brokers can help you compare different packages. Some lenders offer interest rate discounts for first-time buyers, while others provide fee waivers or other incentives.

Choosing Between Variable and Fixed Interest Rates

One crucial decision is selecting your interest rate structure:

Variable interest rate: Fluctuates with market conditions, offering potential savings when rates fall

Fixed interest rate: Provides certainty with locked-in repayments for a set period

Many borrowers choose a combination of both, splitting their loan to balance security with flexibility. Consider adding an offset account to reduce interest charges over time.

Understanding the Application Process

Once you've found your ideal property, the formal application process begins. This streamlined application process typically involves:

• Submitting a complete loan application with supporting documents
• Organising a property valuation
• Finalising loan terms and conditions
• Coordinating settlement details

Having all your paperwork organised from the start speeds up this process significantly.

Planning for the Future

While you're focused on buying your first home, it's worth considering your longer-term property goals. Some buyers eventually explore investment loan options for their first investment property. Understanding how investment loan applications differ from owner-occupier loans can inform your current borrowing decisions.

The property market in Hawthorn offers excellent growth potential, making your first home purchase both a lifestyle and investment decision.

Working with Mortgage Professionals

Accessing banks and lenders nationwide gives you more options and potentially better terms. Mortgage brokers understand the nuances of different lenders' criteria and can match you with suitable options based on your circumstances.

We help you compare loan features, understand the fine print, and identify any potential issues before they become problems. This support continues throughout the entire application process and beyond settlement.

Buying a home represents one of life's biggest financial commitments, but with proper planning and professional guidance, it doesn't have to be stressful. Focus on understanding your options, preparing thoroughly, and making informed decisions that align with your long-term goals.

Ready to take the next step towards homeownership? Call one of our team or book an appointment at a time that works for you. We're here to help make your first home purchase a success.