6 signs you’re ready to buy a home

Young couple looking to buy a home.

Buying a home is a top priority for many Australians, and record low interest rates have helped fast-track property plans all across the country. But the decision to take out a home loan isn’t one to be made lightly. Here’s how you can know you're ready to take on the responsibility.

You have a deposit saved up

If you’ve saved up a deposit, you’ve already made significant strides in your home ownership journey. Ideally, lenders will want to see a deposit equal to 20% of a property’s value. But there are workarounds if this is out of reach. 

For example, it’s possible to take out a home loan with a deposit of as little as 5% so long as you purchase Lenders Mortgage Insurance. This is to make sure your lender won’t be out of pocket if you default on your loan.

There are also government initiatives aimed at helping those with insufficient savings get on the property ladder, such as the First Home Loan Deposit Scheme and the First Home owners Grant. You could also ask your parents to be your home loan guarantor if they have the means and are willing to help.

Your job is secure

Another important area lenders will be looking at is your work history. A full-time job that you’ve held for at least a year signals stability, and will inspire much more confidence in lenders than part-time work or a series of temporary jobs. It’s also a good indication that you’ll be able to keep up with repayments, especially if it pays well. 

You’re prepared for the extra costs

Your mortgage might be the biggest cost associated with buying a home, but it’s not the only one. Once you’re a homeowner, you’ll find there are several more expenses you’ll have to manage, including utilities, taxes and insurance.

The cost of maintenance and repairs will also drive up your budget, particularly if you intend to purchase a detached house. And if you’re looking to buy an apartment, you’ll have to factor in strata fees, which can be fairly exorbitant if you live in a large complex.

You prefer stability

Renting might suit some people just fine, but if you want more stability in your life then owning a home is probably the better option of the two. While it might come with its own set of challenges, you’ll no longer have to worry about rising rents or possible evictions. And if you get the urge to make any changes to your living space, you won’t have to ask for a landlord’s permission.

You have a good credit score 

When determining your ability to service a loan, one of the main tools banks have at their disposal is your credit score. This is the number which reflects all the credit applications you’ve made, the amounts you’ve borrowed, and your tendency to repay on time.

A high credit score signals to lenders that you can be trusted with borrowed money. Not only are you more likely to have your application accepted than someone with a middling credit score, you’ll also have a much easier time securing a bigger loan. 

But even if your credit history isn’t all that impressive, there’s no need to stress. There are always ways to improve your credit score (though it may take some time). And in any case, lenders will be looking at your overall financial standing when assessing your creditworthiness.

You can stick to a budget

Before your lender can approve your application for a mortgage, you’ll need to be able to show you can stick to a budget. Promising to rein in your spending once you’re approved won’t cut it — lenders will want to see evidence that you’re responsible with your money right now. 

To this end, lenders will look over the last three months of your bank statements to make sure you’re spending within your means. If you’re able to show you possess good money management skills, it’s a surefire way to get in their good books.

For more tips to help you get off to the right start, read our first mortgage guide. And when you’re ready to purchase your dream home, make sure to compare home loans to find one that suits your needs.

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 472 home loans.
Last updated 14 June 2024 Important disclosures and comparison rate warning*
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Variable Home Loan 90

    Principal and Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.04% p.a. variable
    6.06% p.a.

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • The Better Home Loan Special Offer

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.14% p.a.

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Discount Variable Home Loan

    Owner Occupier, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a. variable
    6.01% p.a.

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^


* 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 $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. 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.

^See information about the Mozo Experts Choice Home Loan Awards

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