5 tips for first home buyers

A record reduction in the home loan rate, government stimulus packages such as the HomeBuilder, strong consumer confidence and a brief dip in property prices have seen a flood of first home buyers enter the market, a big four bank has revealed.

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In the three months to October 31, lending to first home buyers at NAB increased by 21 per cent against the 12-month average. 

NAB revealed that first home buyers represented the only growth in the market during this time.

“First home buyers are back in the market at levels we haven’t seen for a decade,” NAB executive, home ownership, Andy Kerr said.

“Demand has been supported by historically low interest rates and more government support, such as the First Home Loan Deposit Scheme and HomeBuilder. A brief pullback in property prices also helped FHBs as the uncertainty of COVID-19 put many plans on ice, with investor demand slowing noticeably.


Lloyd Edge, director of Aus Property Professionals, said “it’s exciting to see so many first home buyers enter the market and begin their property journey”.

“As it’s their first foray into ownership, I believe they will need a helping hand, as there are a number of things to consider in order to make home ownership as successful as possible.”

To assist, FHBs as they enter the market, Mr Edge has shared five handy tips: 

Compare home loans and don’t be afraid to refinance your mortgage: A home loan is a long-term debt, so even a small difference in interest adds up over time. With interest rates at incredibly low levels and banks in competitive mode, keep your options open, the property professional said.

Tax time is your friend: Mr Edge also advised FHBs to be aware of the tax benefits they are entitled to. 

“While most people are aware of some tax deductions, a significant proportion don’t claim what they’re entitled to, or they don’t claim correctly.”

He pointed out that a home bought as an investment is entitled to claim the interest you’re paying to the bank, all of the expenses for the property e.g. water bills, strata, certain repairs and tenancy costs if you’re an investor.

“Also, once you purchase a property, hire a registered quantity surveyor so they can put together a depreciation schedule for you and you can then claim assets in the property e.g. lifetime of a rangehood, air conditioner, carpet and blinds,” he explained. 

Manage risk through insurance cover: Mr Edge explained that the type of insurance required will depend on your specific situation, “but I always advise people to never try to save on costs by cutting back on insurance and to always get at least two to three quotes”.

“If you’re an investor, take out landlord insurance which will cover your property as well as fixtures and fittings. Depending on the policy, it can also cover you for liability e.g. damage by pets or tenants, and can compensate you for loss of rental income if the property is severely damaged,” Mr Edge explained.

“If you’re a home owner, take out building (or home owners) insurance as it covers your home from fire, storm damage, floods etc. If you live in a strata title apartment, the building will be covered by residential strata insurance.” 

“Lastly, take out contents insurance, as it will cover the repair or replacement of your possessions inside your home.”

Look into sustainable alternatives: The property expert has told FHBs to not ignore the benefits of solar panels when purchasing a property. 

“There are a number of solar rebates available, so make sure you look into the options, as it varies state by state. If you’re a landlord, this will bode well with tenants as it will mean less bills and you can potentially increase your rent. Looking at it long-term, it will increase the value of the property and add equity straight away,” Mr Edge told first home buyers. 

“Also, switching to energy-efficient LED lights will reduce energy use and greenhouse gas emissions.” 

Think long-term about the equity: Mr Edge said that depending on your long-term goals, you can use the equity in your current home for a deposit on another home.

“If you’re considering this, my top tip is to never cross collateralise loans – a situation where collateral for one loan is used as collateral for another loan, as it gives the bank too much control.”

“You can also use the equity for renovations to add further value, pay for private school tuition for your children, overseas holidays etc. The options are endless, and property truly does give you the chance of financial freedom and flexibility,” Mr Edge concluded. 

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