First Time Buyer Advice: Your Guide to Buying Your First Home

Understanding First Home Buyer Eligibility

As a corporate lawyer considering buying your first home, understanding the eligibility criteria is your starting point. To qualify as a first home buyer in Australia, you typically cannot have previously owned property in Australia. Some states have additional requirements, such as income thresholds and property price caps.

Most lenders will assess your first home buyer eligibility based on several factors:

• Your employment history and income stability
• Your savings history and deposit amount
• Your credit history and existing debts
• Your borrowing capacity based on living expenses

Corporate lawyers often have strong employment prospects and income growth potential, which can work in your favour during the first home loan application process.

Building Your First Home Buyer Budget

Creating a realistic first home buyer budget involves more than just the property purchase price. You'll need to account for:

1. Deposit: Typically between 5% and 20% of the property value
2. Stamp duty: Unless you qualify for concessions
3. Legal and conveyancing fees: Usually between $1,500 and $3,000
4. Building and pest inspections: Around $500 to $800
5. Lenders Mortgage Insurance (LMI): If your deposit is below 20%
6. Ongoing costs: Council rates, insurance, and maintenance

As a lawyer, you may be eligible for LMI waivers or no LMI loans, which can significantly reduce your upfront costs.

First Home Buyer Grants and Concessions

Australia offers several initiatives to help first home buyers enter the property market. The first home owner grants (FHOG) vary by state but typically provide $10,000 to $15,000 for purchasing or building a new home.

First home buyer stamp duty concessions can save you thousands of dollars. Each state has different thresholds, but these concessions can reduce or eliminate stamp duty on properties below certain values.

Government Schemes and Low Deposit Options

The First Home Loan Deposit Scheme allows eligible first home buyers to purchase a property with a 5% deposit without paying Lenders Mortgage Insurance (LMI). The government guarantees up to 15% of the property value, reducing the lender's risk.

The Regional first home buyer Guarantee operates similarly but applies to properties in regional areas, with specific postcodes eligible for the scheme.

For those who can save a 10% deposit, this provides more flexibility in home loan options and may allow you to access better interest rate discounts. Some lenders also accept a gift deposit from family members, which can be combined with your savings to reach the required deposit amount.

Exploring Home Loan Options

When you apply for a home loan, you'll encounter various loan structures and features. Understanding these will help you make informed decisions:

Interest Rate Types

• Variable interest rate: Fluctuates with market conditions, offering flexibility with features like offset accounts and redraw facilities
• Fixed interest rate: Locked in for a set period (typically 1-5 years), providing certainty in repayments
• Split loans: Combining both fixed and variable portions

Loan Features

An offset account links to your home loan and uses your savings balance to reduce the interest charged. For example, with a $500,000 loan and $30,000 in your offset account, you only pay interest on $470,000.

A redraw facility allows you to access additional repayments you've made above the minimum requirement, providing financial flexibility for unexpected expenses.

The First Home Loan Application Process

Before you start property hunting, consider getting loan pre-approval. Pre-approval indicates how much you can borrow and demonstrates to vendors that you're a serious buyer. The approval is typically valid for 3-6 months.

Your first home buyer checklist should include:

1. Review your credit report and address any issues
2. Gather financial documentation (payslips, tax returns, bank statements)
3. Calculate your borrowing capacity
4. Research home loan options and features
5. Obtain pre-approval
6. Engage a conveyancer or solicitor
7. Start property searching within your budget
8. Complete the formal home loan application once you find a property

First Home Super Saver Scheme

The first home super saver scheme (FHSS) allows you to save for your first home inside your superannuation fund. You can make voluntary contributions of up to $15,000 per year (with a total cap of $50,000) and later withdraw these amounts plus deemed earnings to put towards your deposit.

This scheme offers tax advantages, as contributions are taxed at the concessional superannuation rate rather than your marginal tax rate. For corporate lawyers in higher income brackets, this can result in substantial savings.

Leveraging Your Professional Status

As a corporate lawyer, you have access to specialised home loans for corporate lawyers that recognise your professional qualifications and career trajectory. These products often include:

• Higher borrowing limits based on future earning potential
• Reduced or waived LMI on deposits as low as 10%
• Preferential interest rates
• Flexible features tailored to professionals

Many lenders view legal professionals as lower-risk borrowers due to stable employment prospects and higher earning capacity, which can translate into more favourable loan terms.

Making Your Decision

Buying your first home is a significant financial commitment that requires careful planning and consideration. Take time to research your home loan options, understand the total costs involved, and ensure the ongoing repayments fit comfortably within your budget.

Consider seeking professional advice to identify the most suitable loan structure for your circumstances. A mortgage broker who specialises in working with lawyers can help you access products and rates that may not be available through direct lender channels.

Remember that buying your first home is just the beginning of your property journey. Many lawyers later consider expanding your property portfolio once they've established equity in their first property.

If you're ready to explore your options as a first home buyer, call one of our team or book an appointment at a time that works for you. Our mortgage brokers specialise in helping legal professionals secure their first home loan with terms that recognise your professional status and future potential.