How to help your first home buyers as numbers grow

A combination of dropping interest rates and the First Home Loan Deposit Scheme have led to the highest number of first home buyers in the market for the last decade, and while this can be a reason to celebrate, some are urging caution.

The Australian Bureau of Statistics Lending Indicators for January 2020 saw the number of loan commitments to first-time owner occupiers surge 3.2% in a month. Almost 10,000 loan commitments were recorded for first home buyer owner occupiers in January.

It’s not just owner occupiers, however. The number of first home buyer commitments for investment purposes made up 4.7% of the total figures.

Brokers have also been reporting higher levels of enquiries from first home buyers, and in response have been sharing their tips for the segment.

Louisa Sanghera, Zippy Financial director and principal broker, said that those buying their first home needed professional help more than any other segment.

“Long before they decide to buy property, first-time buyers should seek expert advice and instigate a number of budgeting and saving strategies to improve their borrowing capacity,” she said.

Aussie Home Loans CEO James Symond also advised that buyers should be cautious of entering the market without doing research.

“First home buyers now have even greater opportunity to break into the market,” he said. “While there are thousands of low rate home loan products available for first home buyers, ranging from basic loans to more sophisticated offerings, first home buyers need to be properly informed before committing themselves to a long term financial commitment.”

Tips for first home buyers

Sanghera has released her tips for those buyers considering entering the market for the first time. As a broker, you can help your clients with the following:

  1. Create and stick to a budget before, and after, becoming a homeowner, to help manage mortgage repayments
  2. Buy a house first and a car second. Large car loans can significantly impact borrowing power
  3. Reduce discretionary spending including Uber Eats and Afterpay purchases
  4. Cut up credit cards or reduce their limits
  5. Research the areas they can afford and then consider applying for a loan pre-approval before starting the property search
  6. Apply for a loan pre-approval at the likely maximum purchase price. Sanghera said you can always reduce the amount of loan required, but it can be difficult to increase the loan once approved, which can cause unnecessary delays
  7. Understand the timeframes and steps involved to secure one of the government’s First Home Loan Deposit Scheme allocations