With interest rates being the lowest since 2003, more cuts in sight and the first home buyer’s grant still doubling to $14 000, it is the prime opportunity for ‘first-timers’ to take the big step into home-ownership.

Lay the ground work

Write a budget - look at your overall income versus your overall expenses including groceries, fuel and rent.

Whatever is left is basically how much you could commit to repaying a loan.

Before committing, you should also consider any possible variations in your income due to work changes and especially if you are planning on having kids.

This may reduce a two person income back to one for some time.

It is also recommended to get a credit rating check before you apply for a loan.

If you are holding any other personal or car loans and credit cards it is worth considering pooling these into the one loan.

Deposit and loan types

Today’s mortgage market has a multitude of loan types available with variations in interest rate, features and fees charged.

It is always good to speak to at least three lenders, with brokers usually having access to more loan types from different lenders than your bank.

In respect to your deposit, traditionally you need to have 20% of the purchase price.

However depending on the loan type, usually with a higher interest rate, you can get into a property with as low as 5% deposit.

A newer loan product is the shared equity loan, which allows you to get into an owner occupied property without a deposit.

This is particularly helpful to getting into the market now verses further down the track when you have saved up a deposit plus the extra funds needed to cover the additional costs of purchasing property.

The First Home Buyer’s Grant is a great help with these, if you qualify.

Getting a loan and pre-approved

When applying for a loan, it is good to speak to a number of lenders or brokers in order to fully understand the various loan products available to you.

Having your loan amount set and pre-approved also gives you a better negotiating stance and is especially helpful should you consider buying at an auction.

Keep in mind that you may not necessarily wish to go right to the maximum loan amount offered to you as this can create mortgage stress should there be any up-ward movement in interest rate in the shorter term.

Borrow what you can afford.

Be aware of additional costs

There are of course a number of other costs that are part of purchasing property.

These range from stamp duty (may be covered by the FHBG) and solicitor fees to pre-purchase building and pest inspection charges.

Once bought, you will also be facing insurance fees, council rates and maintenance costs, water rates, transfer or connection fees for services etc, so do not budget to the last penny as you should have little buffer in reserve.

You may also need to do some repairs or renovations on the property in order for it to meet your needs.

Moving into a new home can usually cost more than expected from the moving cost itself to a possible overlap during which you may still be paying rent on your old home, yet are already meeting your mortgage obligations. If you are considering buying an apartment verses a house you are likely to be paying strata management fees as well – be sure to assess all holding costs before making an offer.

Preparing yourself for buying

It is advisable to attend a first home buyers seminar, read relevant books and information and to speak to industry professionals such as lawyers, real estate agents, investment advisers or accountants.

The golden rule is to speak to at least three different people so you do not rely on a single opinion. A good tip for this is to seek people you feel comfortable and trusting with, as it is ultimately your money and your life that you are making this major decision about.

Good advice is priceless, so don’t skip this step and don’t be shy of a little expense to get it.

Inspecting properties

Once you have identified properties that fit your intended budget and desired location, make appointments to view them.

It is advisable to look thoroughly, but to not reveal all of your thoughts and feelings to the owners or agent.

Always look at a property more than once or twice if you feel it could be the one. You will be surprised of how many things you notice the second time around.

Take notes and even photos of each property you inspect, as they tend to blur into each other once you have looked at a few.

Ask lots of questions (ideally of the owners) to get a better idea about what it is actually like to live there.

Make sure you see the property at different times of the day and even when it is raining – you will gain more insight this way.

The purchasing process

Once you have a shortlist of two or three properties or know the one you have fallen in love with, the next step is to make an offer of purchase.

Commonly, in most states around Australia buyers will offer a lesser amount than the asking price.

Try to treat the negotiation process with a logical approach rather than an emotional one – this can be difficult, but can help achieve a better price for you.

And you don’t go over your budget!

Once you reach an agreement on price, the contract of purchase is drawn up and once checked and agreed will proceed to exchange – at which point you will have to pay the deposit.

You do have a cooling-off period (5 working days) during which you can change your mind should you experience buyer’s remorse.

Should you change your mind about the purchase, you forfeit one-quarter of a per cent of the total sale price, but otherwise retain your deposit funds.

The cooling-off period falls away if you are buying at an auction, so be really sure before you attempt the winning bid.

Settlement

Once the contracts have been exchanged, your solicitor will do the necessary searches and proceed until settlement is due (usually 30 – 60 days), at which point your bank or lender will release the funds to the seller or seller’s lawyer.

Upon settlement, the property is transferred into your name and you gain legal access to it.

At this point most first home buyers will crack that bottle of champagne that has been patiently chilling away in the fridge until that special moment.