First Home Buyers

A guide to buying your first home

A penny saved

Saving for a deposit on a first home can feel like an uphill journey; especially if you don't have the right tools or strategy in place to make your dream a reality. Use our detailed Budget Planner to work out your current expenses, how long it will take you to reach your goal and what you can adjust to make it all happen. Then check out our savings and investment accounts to see what products could help facilitate your savings goal.

How much can I borrow?

Many factors are used to determine your borrowing power including existing financial commitments, living expenses, credit history and of course your income. To get a good idea of what you can expect to borrow on your home loan, use our Borrowing Power Calculator.

Taking the mumbo jumbo out of choosing a home loan

Fixed or variable home loan, split or low doc home loan? There are so many home loan products out there it's hard not to feel a bit daunted when trying to choose the right one for you. The St.George Advantage Package makes the choice easy. It's an all in one banking option incorporating your home loan, credit card and transaction account in one easy to manage package.

In addition to its Cannex 5 star rating^# (current as of August 2009) our Advantage Package offers:

Home loan interest rate discounts - up to 0.70% p.a. off our Standard Variable or Portfolio Loan Variable rates and up to 0.15% p.a. off our Standard and Portfolio Loan Fixed rates.

$0 loan establishment, increase and switch fees - save up to $700.

$0 monthly loan administration fee - save up to $14 per month.

$0 annual credit card fee.

$0 monthly transaction account service fee.

$0 monthly service fee with 100% interest offset facility fees - save $5 per month.

Below are some of our more popular home loans for first home buyers; or you can check out our Home Loan Product Selector to find the best product for you.

Our suggestionWhat do you need from a home loan?

Basic Home LoanYou need a straight forward, easy-to-use home loan.

Standard Variable RateYou want flexibility with a full range of features.

Fixed Rate Home LoanYou want to budget for the future with confidence.

Introductory Rate LoanYou need help managing the initial costs of buying your first home.

Low Doc Home LoanYou want a home loan but are having trouble providing documented proof of income.

Portfolio LoanYou want to create wealth to secure your future.

Use our home loan comparison chart for a snap shot of St.George loans and their features and benefits.

Fixed versus variable

When choosing a home loan, it's a good time to start thinking about whether a fixed home loan or variable loan is best for you. There are benefits to both home loans but here are the main ones to consider:

Fixed home loans - if you like the certainty of knowing exactly what you need to pay and when, it's best to go fixed. Your mortgage repayments are guaranteed and it makes it much easier to budget and plan ahead. And if interest rates go up, you can rest assured that your home loan interest rate will remain locked in for the fixed period. But of course, if rates go down, you'll be locked in to your fixed rate and unable to take advantage of the lower market rates.

Variable home loans - one way to think about this type of loan is that it generally reflects the state of the market. If interest rates go down, yours most likely will too. On the other hand, if they rise, chances are you're in for a hike. The best aspect of this loan type is you can take advantage of times when interest rates are at their lower range.

To split or not to split a home loan?

For those who like the sound of both, you could hedge your bets and split your home loan. A portion of the home loan can be fixed - to play it safe and guarantee repayments; and a portion can be variable - to take advantage when interest rates are low.

If you're still trying to get your head around it, here's a good rule of thumb to keep in mind: a quarter of a per cent increase in interest rates means around $15 more in home loan repayments per $100,000 you owe, per month.

So working out what you can afford in interest and keeping an eye on the market can help you decide. Work out the benefits of having part of your home loan at a variable rate and the remainder at a fixed rate using our Split Loan Repayment Calculator.

Applying for a home loan

1. Apply over the phone or in person (at one of our branches or with one of our mobile lenders).

2. Discuss with a St.George lender your situation and the most appropriate home loan option for you. They will complete an application and collect the necessary documentation from you.

3. After we confirm the details of your home loan application (e.g. your borrowing capacity, credit history) we will issue you a Loan Approval. Sometimes we issue a Conditional Approval (or pre-approval). This means you have the loan subject to certain conditions (such as a satisfactory property valuation) and is particularly handy to have while searching for a home as it gives you a guide of your borrowing power.

4. You should review your Loan Approval, Mortgage and other documentation closely with your solicitor, sign and return these to your lender.

5. After we receive your signed documentation, we liaise with you and your solicitor to make sure all conditions of the loan approval are satisfied...and if so, voila, you have your home loan.

Use our Home Loan Application Checklist to make sure you've covered everything you need before you apply for your loan.

The low down on Stamp Duty

Stamp Duty is one of those extras that add up when buying your home. It's a State Government tax dependent on the State or Territory you are purchasing in that is payable on the transfer of property.

As an incentive for first home buyers, most Australian States and Territories offer Stamp Duty concessions to those purchasing their first property if it's under a certain amount.

To find out more about Stamp Duty and to see if you're eligible for any other government assistance visit www.firsthome.gov.au and click on your home state.

Other Stamp Duty costs to consider

There may be more than one type of Stamp Duty payable when you buy your home. There's the duty, as described above, based on the property price. This is generally the highest cost associated with the purchase.

And then there's Stamp Duty on the mortgage. The rates vary depending on your State and the value of the property. Find out what you're likely to pay for each type using our Stamp Duty Calculator.

Will you need Lenders Mortgage Insurance?

Depending on the type of loan, property type and location, you may need to take out Lenders Mortgage Insurance (LMI). This is usually required for those who have a deposit less than 20% of the value of the property.

LMI protects your lender against loss if you default on the loan. If the property is sold at a price that does not cover the loan in full, the insurance will cover the debt owed.

Remember that your family could lend a helping hand if you don't meet the minimum deposit for a home loan with the St.George Family Pledge.

Doing the leg work

Now that you have your deposit together and you know the fees and charges to service your home loan, it's time to hit the pavement in search of your first home.

Our Home Buyer's Checklist can help you keep track of all the features and inclusions of each property you view.

Location, location, location

It's an exciting time...but it can also be overwhelming with choice and making decisions. It's a good idea to make a list of things you can't live without and those that are just nice to have. Consider aspects like:

Is the property close to amenities like schools, transport, shops, parks or bike tracks? Remember the bandied about real estate advice: buy the worst house in the best street.

Are there any development plans scheduled for the area (e.g. new roads, railway stations)? Are these plans in your favour (will they add to your property value) or against it? Check with the local council to find out.

Do you want to live in your new home for a short time or long term? Is there scope for improvement, renovating, extensions should you need it?

Is the location experiencing growth? A boom in apartments, cafes or shopping outlets? Is it on the RP Data's national hotspots list?

Sign up for email updates and access RP Data's National Property Hotspots Report, valued at $249, for FREE.

Where can I afford to buy?

It's one thing to desire a beach side locale or a cottage in the mountains but what suburbs can you really afford and how much are you able to borrow? Use the Where can I buy? Calculator to find out.

Inspections...a must have

Now's not the time to scrimp. When you've located your perfect home and are about to put in an offer, make sure you have a professional, independent building, pest and strata (for those buying an apartment) inspection.

Building inspections will usually cover things like:

Structural damage to the roof space.

Sub-floor ventilation and drainage.

Rising damp, asbestos and other hazards.

Damage or problems with gutters, windows, foundations, cracks.

Doors, ceilings, plumbing, electrical wiring.

Extensions, renovations, additions that do not meet regulations.

Pest inspections look out for things like:

Existing or potential damage from all kinds of pests.

The active presence of pests, like termites or white ants.

Strata inspections are only applicable to apartments/townhouses and they cover:

Ongoing maintenance fees and any special levies payable.

Rules and regulations set out by the Body Corporate/Owner's Corporation.

History of disputes or claims against the current owners.

The balance in the administrative and sinking funds.

Whether the insurance cover for the building is adequate.

What if problems are found?

You don't have to kiss your dream home goodbye if problems are identified in any of the reports. You could use the information to find out the cost of fixing any problems and negotiate a lower price through the real estate agent. But remember, if you don't organise inspections or don't take note of the findings it could cost you thousands of dollars in repairs that you didn't factor in to the price...and that could hurt.

Making an offer

So you've found your dream home and, armed with your pre-approved loan, you're ready to make an offer (private treaty) or make a bid (auction).

Private treaty

There are two types of offers here - conditional and unconditional. It's a good idea to make a conditional offer which states that certain conditions must be met to make it legally binding, such as home loan approval, and pest, building and strata reports. A cooling off period of usually 2 to 5 days, depending on your State or Territory, can apply for private treaty which gives you time to get your paperwork sorted.

Auction

Make sure you do your homework when it comes to auctions. Different legal requirements in each State and Territory can make it tricky - in NSW for example, you must officially register your details with the auctioneer in order to bid.

If you're the highest bidder at an auction and your offer is accepted, there is no cooling off period. You are required to exchange contracts there and then and pay your 10% deposit. If your offer is not accepted and you are the highest bidder, you have first rights to negotiate with the vendors.

Signing on the dotted line

Once you've completed the necessary building and pest inspections, as well as a strata inspection (if buying an apartment) it's time to exchange contracts.

The contract is a legally binding document that details everything about the purchase of the property including the title, terms and conditions, sewerage diagrams and any inclusions as part of the sale (for example blinds or curtains, light fittings etc). It also states your settlement date - the date when you take possession of your new home. You have to sign this document and exchange it with the vendor.

Don't fret at the legalese you can face in the contract. Your solicitor (or conveyancer) will guide you through this part of the process.

Settling on your property

Settlement usually takes about 6 weeks, although if both parties agree it can be longer or shorter, depending on circumstances. This gives your lender time to process your loan so it's ready for settlement.

You're almost there so now's a good time to start planning your move. There's a lot to get ready for the big day but if you stay focused and organised it could be smooth sailing.

Use our Moving Checklist to make sure you've ticked all the boxes.

Insuring your asset

As a home owner you may be concerned about protecting your most expensive asset. There's no need to worry, just make sure you have the right cover should anything unexpected happen. You'll need to look at:

Building insurance - covers the structure and fixtures of your home.

Contents insurance - covers your belongings including furniture, artworks and jewellery.

Find out more about home and contents insurance.

Home Loan Protection - pays a lump sum to cover your home loan if you pass away, or are diagnosed with a covered serious medical condition or are permanently unable to work.

Find out more about Home Loan Protection.

What to look out for when insuring your home:

Avoid being under-insured by making a room by room, floor to ceiling list of all of your contents. Include carpets, shoes, clothes, soft furnishings, bedding, toys, cosmetics, perfumes, cookware and tools - in short, everything you own. Then estimate the full replacement cost of every item and insure accordingly.

Most policies ask you to list valuables that are worth over a certain amount like rugs, antiques, artworks and electrical goods. Be sure to list such items with their dollar value so you can claim their full cost, otherwise your claim may be limited to a set maximum dollar value per item.

When choosing contents insurance be sure to consider what the policy offers. For example, a replacement policy replaces older goods for new ones and an indemnity policy applies depreciation to your assets.

The final step

So the day is finally here and you're just about to get handed the keys to your new home. All the hard work has paid off and the long weeks of waiting have come to an end.

On the day of settlement, it's a good idea to make a final inspection of the home just to make sure everything is in order. If you're satisfied, the only thing left to do is hand over the cheque with the balance owing, and take ownership of your new home.