Dec 9, 2023 9:52:45 AM

Top Budgeting Tips for First Home Buyers in Australia

Topics: Budget, First Home Buyer, saving tips 0

Over the past few years, property prices in Australia have skyrocketed in many regions, forcing some first home buyers to reconsider their home ownership goals. Without a big enough deposit or existing equity to leverage, it can be especially challenging for first home buyers to break into the property market. But it’s not impossible. Use these 5 budgeting tips to financially prepare for home ownership and set yourself up for success.


1. Get clear on your income and expenses

One of the first things that lenders will require as part of your home loan application is a comprehensive view of your income and expenses. It’s an important part of determining your financial standing and ability to repay your mortgage.

Calculate your income from all sources – including salary, wages, bonuses, commission – and then work out your expenses. It’s helpful to track these figures in a budget as it could also highlight areas that could be improved upon by cutting back or saving more.

2. Check your credit score and pay your bills on time

Before approving a mortgage application, lenders will review your credit report and look at your credit history and repayment behaviour. Obvious red flags are court judgements, bankruptcies and defaults. But things like multiple enquiries, late repayments or certain types of loans can also lead to questions from lenders.

Request a copy of your credit report to check your credit score and ensure there are no discrepancies that could impact your loan application. Generally, the higher the credit score the better your chances of loan approval. Making on-time debt repayments and paying down your debt can improve your credit score over time.

3. Start a savings account or emergency fund

Your ability to save is another important aspect of your mortgage application that demonstrates to lenders that you’re a reliable borrower. Serviceability is an essential part of the lending process, and lenders want to be sure that you can repay your mortgage and won’t default on your loan.

As part of your deposit, lenders will want to see genuine savings, money you’ve put aside that could be:

  • Savings held in a separate account for at least three months
  • Term deposits with terms lasting more than three months
  • Funds that have been salary sacrificed under the First Home Super Saver Scheme
  • Shares or managed funds that you have held for a minimum of three months
  • Inheritance funds held for at least three months

While each lender has its own genuine savings policies, your savings and deposit can impact the amount you may be able to borrow as well as your chances of loan approval.

4. Understand your options for Government assistance

There are a range of government programs aimed at helping first home buyers buy property in Australia, including the First Home Guarantee Scheme and Family Home Guarantee, First Home Super Saver Scheme, and First Home Owner Grant.

Provided you meet eligibility requirements, this financial assistance could be just the kickstart you need to get onto the property ladder. Consult with a mortgage broker to find out if you qualify for financial assistance for first home buyers.

5. Consider low deposit mortgage options

As property prices continue to climb across many of Australia’s regions, first home buyers struggling to save a big enough deposit often face a decision of whether to buy now before prices increase further, or to wait and save a bit more.

If you’re struggling to save a big enough deposit, it’s worth investigating low deposit mortgage options. Some lenders will consider a lower deposit although these mortgages will usually include additional fees such as lender’s mortgage insurance or higher interest rates.

First home buyer advice

Before making any decisions that could impact your financial situation, consult with a mortgage broker, such as those at Mortgage Express. An experienced mortgage broker can review your current financial situation and help you plan for the future. Get in touch with Mortgage Express to connect with a mortgage broker near you and get mortgage advice for first home buyers.

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.