Top tips to prepare for your first property purchase

Purchasing your first home represents a significant milestone in your career as a tutor. Proper preparation can make the difference between a smooth application process and unnecessary delays or complications. Understanding the key steps involved in property purchase preparation will position you for success in the Australian property market.

Understanding Your Financial Situation

Before you begin searching for properties, conduct a comprehensive review of your financial position. This involves:

• Calculating your current income and expenses
• Reviewing your bank statements from the past three to six months
• Assessing your existing debts and commitments
• Determining your available deposit amount
• Understanding your borrowing capacity

Your financial situation directly impacts the loan amount you can access and the interest rate you may receive from lenders. As a tutor, you may have irregular income patterns, so maintaining detailed financial records becomes particularly important when applying for a home loan.

Exploring First Time Home Buyer Programs

Australia offers several first time home buyer schemes designed to assist with property purchases:

First Home Owner Grants (FHOG)
These state-based grants provide financial assistance, typically ranging from $10,000 to $20,000, depending on your location and the type of property purchased.

Home Guarantee Scheme
This federal initiative allows eligible first-time buyers to purchase with as little as a 5% deposit without paying lenders mortgage insurance (LMI). The Home Guarantee Scheme can significantly reduce your upfront costs.

Stamp Duty Concessions
Most states offer stamp duty reductions or exemptions for first-time buyers, potentially saving thousands of dollars on your property purchase.

Calculating Loan to Value Ratio (LVR)

The loan to value ratio represents the percentage of the property's value that you're borrowing. For example, if you're purchasing a $600,000 property with a $60,000 deposit, your LVR would be 90%.

Understanding LVR is crucial because:

• LVR above 80% typically requires LMI
• Lower LVR often results in better interest rate discounts
• Some lenders offer special packages for education professionals with higher LVR limits

Accessing Home Loan Options

As a tutor, you can access Home Loan options from banks and lenders across Australia. Working with a mortgage broker provides several benefits:

• Access to banks and lenders nationwide
• Comparison of different loan products and features
• Professional guidance through the application process
• Assistance with investment loan options if you're considering property investment

Many lenders offer specific packages for education professionals, including home loans for tutors with favourable terms and conditions.

Choosing Between Interest Rate Types

When applying for a home loan, you'll need to decide between:

Variable Interest Rate
• Rate fluctuates with market conditions
• Often includes offset account facilities
• Provides flexibility for additional repayments

Fixed Interest Rate
• Rate remains constant for a specified period
• Provides certainty in repayment amounts
• Protection against interest rate increases

Many borrowers choose a combination of both, splitting their loan between fixed and variable portions.

Getting Pre-Approved

Obtaining pre-approval before house hunting offers several advantages:

• Confirms your maximum borrowing capacity
• Demonstrates serious intent to real estate agents
• Streamlines the final application process
• Provides confidence when making offers

Getting loan pre-approval typically takes one to three business days and remains valid for 90 days.

Preparing Your Documentation

Gather the following documents before beginning your home loan application:

• Recent payslips and employment contracts
• Bank statements for all accounts
• Tax returns and assessment notices
• Details of existing debts and commitments
• Identification documents

For tutors with multiple income sources, maintaining organised financial records throughout the year will expedite the application process.

Understanding Ongoing Costs

Beyond the purchase price and deposit, consider these ongoing expenses:

• Council rates and water charges
• Building and contents insurance
• Maintenance and repairs
• Mortgage repayments
• Potential body corporate fees

Factoring these costs into your budget ensures sustainable homeownership.

Planning for Your Investment Property Future

Many tutors eventually consider buying your first investment property. Starting with a well-structured first home loan can position you for future property investment opportunities through equity growth and improved borrowing capacity.

Proper preparation for your first property purchase sets the foundation for long-term financial success. By understanding the various schemes available, preparing your finances, and working with experienced professionals, you can confidently move forward with buying your first home.

Call one of our team or book an appointment at a time that works for you to discuss your specific situation and explore the home loan options available to tutors across Australia.