5 New Year's resolutions for first home buyer success in 2019

Niko Iliakis

09 Jan 2019

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After a tumultuous few years which saw housing prices skyrocket to the highest they’ve ever been, the Australian property market looks set to settle down - at least a tiny bit - in 2019.

And if the decrease in prices (2% over the past year according to CoreLogic) are anything to go by, this could prove to be a breakout year for first home buyers.

But landing your first home is no easy feat, even in a favourable market. So if you’re one of the many Australians eager to buy, here are some resolutions to put you in the best position for property success.

1. Save towards a 20% deposit

While there are home loans out there that let you borrow 95% of a property’s price, having a deposit that’s 20% or more is ideal.

A large deposit means you won’t have to spring for lenders mortgage insurance. Plus you’re less likely to be straining under the weight of your monthly repayments since you’ve borrowed less.

Young people looking to buy their first home will want to review their spending habits and think about cutting back on any unnecessary purchases. The sooner you get serious about saving, the sooner you can get a sizeable deposit going.

For a precise picture of how much you spend, consider using our budget calculator or a budgeting app. You might be shocked to learn how much those daily lunches and Ubers amount to, but it could be a much needed wake-up call to get on top of your finances.

2. Make sure your credit is first-rate

Imagine you worked at a bank. If someone with your savings, credit history, and spending habits asked you for a loan, would you give it to them? This is the mentality you need to put yourself in if you’re serious about purchasing your first home.

Considering lenders usually want to see 3-6 months’ worth of bank statements when assessing your eligibility, you need to keep on top of your bills and credit card repayments for at least that long if you haven’t been already.

If you’re concerned your credit history isn’t up to snuff, check out our guide for improving your credit score.

3. Start thinking long-term

So you’ve found your ideal home. It gets plenty of sun, the neighbours seem fantastic, and it’s smack dab in the middle of a trendy cafe district. But oof, that price tag isn’t so great. While it might be tempting to rush into things, you need to be realistic about what you can afford.

Sometimes your best bet is to view your first property as an investment — the first step in an ongoing process aimed at landing the property of your dreams.

That means lowering your expectations a bit and perhaps looking outside your preferred areas to find a home that fits your current budget. When you’re more secure financially, then you can trade up.

One avenue to consider is ‘rentvesting.’ That’s when you purchase a home in one area while continuing to rent in another, more preferable one. For young Australians who’ve felt locked out of the property market for too long, this has become an increasingly attractive option.

4. Ask for help if you need it

If the required deposit seems a bit too daunting, you don’t have to bail on your hopes just yet. Parents and other family members can act as guarantors if they have property of their own.

If your folks are willing to put up their own house as security and - if you’re doubly lucky - chip in towards the deposit, it will go a long way towards increasing your chances at securing that home loan. (Just make sure everyone understands the risks involved: if you default, your parents will have to pay or risk losing their home.)

What’s more, it could spare you having to pay lenders mortgage insurance - which will save you thousands - so maybe today’s a good day to take up your mum’s offer to grab some coffee together.

5. Stay on top of market trends

Following the ups and downs of property rates might give you a headache, nausea, vertigo, or all three, but it’s crucial for anyone looking to break into the market.

At the moment, speculation about how low prices will go dominates the discussion. Analysts say downward trends will most likely continue for Sydney and Melbourne house prices, giving first home buyers in the two major cities a ray of hope. Meanwhile, prices in Brisbane have remained relatively flat, but are slated to increase in the distant future thanks to the city’s growing appeal.

It’s also a good idea to stay on top of changes in interest rates if you want to snap up a good home loan deal.

No one said it was going to be easy, but if you can stick to these resolutions your first property could be within reach sooner than you think. If you’ve got a place in mind and you’re confident you can make the repayments, head over to our home loan rate comparison page for a run-down of your options.

First home loans - rates updated daily

  • Promoted

    loans.com.au

    3.19% p.a. variable

    3.21% p.a.

    $1234

    Product details Close details
    Essentials Variable 90

    This low-rate home loan that could save you thousands! With no monthly or ongoing fees and the ability to make unlimited additional repayments. This home loan from popular online lender loans.com.au also features unlimited free redraws with no minimum redraw amount.

    • 3.19% p.a. variable

    • 3.21% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 90.00%

    • $50,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Essentials Variable 90

  • Promoted

    HSBC

    3.17% p.a. variable

    3.19% p.a.

    $1234

    Product details Close details
    Discounted Home Value Loan

    Unlimited free extra repayments and no ongoing service fees when you apply by 30 November 2019 (T&C’s apply). Get help with the application process with an HSBC relationship manager. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.^

    • 3.17% p.a. variable

    • 3.19% p.a.

    • $150

    • $0.00

    • $300.00

    • yes - free

    • yes - free online

    • no

    • 90.00%

    • $50,000

    • $7,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Discounted Home Value Loan

  • Promoted

    Well Home Loans

    3.07% p.a. variable

    3.10% p.a.

    $1234

    Product details Close details
    Well Balanced

    A low rate home loan for variable owner occupied loans, up to 90% LVR and no fees. Winner of a Mozo Experts Choice Award 2019 for the Best New Home Loan.^

    • 3.07% p.a. variable

    • 3.10% p.a.

    • $785

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • Optional - $10 per month

    • 90.00%

    • $200,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Well Balanced

  • Promoted

    Heritage Bank

    3.52% p.a. variable

    3.88% p.a.

    $1234

    Product details Close details
    Variable Rate Loan Home Advantage

    • 3.52% p.a. variable

    • 3.88% p.a.

    • $150

    • $350.00 yearly

    • $250.00

    • yes - free

    • yes - free

    • yes

    • 90.00%

    • $150,000

    • $249,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • First year $350 annual fee waived for applications made before 31 October 2019 and funded by 31 December 2019.

    Read our Mozo Review to learn more about the Variable Rate Loan

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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