6 common myths about buying your first home

The contents provided on this page are for informational purposes only and do not constitute financial advice. 

Planning on buying your first home? Congrats that’s a big step! But there are plenty of myths and misconceptions floating around when it comes to being a homeowner.

These can get confusing and might drag out decisions or even make you rethink about buying, costing you time and money. This article is here to help dispel the popular myths about buying your first home to make your journey as easy and fast as possible. 

Myth 1: You need a 20% down payment to buy your first home 

You might have heard you need to save up a big 20% down payment to buy your first home. 

Good news – things are changing! In Australia, there are government-backed home schemes that let you buy a home with as little as a 5% deposit. 

Let’s break down the criteria for a few of these schemes. 

  1. The First Home Guarantee Scheme and Regional Home Guarantee Scheme enable you to buy a home with a 5% deposit without paying Lenders Mortgage Insurance

To apply for this scheme you must be:

  • Applying as an individual or 2 joint applicants.
  • An Australian citizen(s) or permanent resident(s) at the time they enter the loan.
  • At least 18 years of age.
  • Earning up to $125,000 for individuals or $200,000 for joint applicants.
  • Intending to be the owner-occupier(s) of the purchased property.
  • A first home buyer or previous homeowner who hasn’t owned a property in Australia in the past ten years. 
2.  The Family Home Guarantee Scheme enables you to secure a home with a minimum 2% deposit.          This initiative is for single parents or single legal guardians of at least one dependent to help                them buy a home sooner. 

      To apply for this scheme you must be: 

  • A single parent or single legal guardian or at least one dependent. 
  • An Australian citizen or permanent resident at the time they enter the loan
  • At least 18 years of age.
  • Earning no more than $125,000 per year. 
  • Intending to be the owner-occupier of the purchased property.

3. The First Home Super Saver Scheme (FHSS) allows you to dip into your super savings to                      contribute towards your home deposit. 

    To apply for this scheme you must be:

  • 18 years old or older when requesting an FHSS. 
  • A first home buyer, having never owned property in Australia. 
  • Intending to occupy the property you buy as soon as practicable and for at least 6 months within the first 12 months you own it after it's practical to move in.
  • Someone who has not submitted an FHSS release request before. 

Make sure to check the details of each scheme to ensure you are across the various requirements, full terms and conditions and up-to-date information. 

Myth 2: Your first home must be your forever home

While it's natural to dream about settling down in your dream home, the myth that your first home must be your forever home can add unnecessary emotional and financial pressure and make the home-buying process more daunting. 

Starting with a smaller place is totally fine as you get used to taking care of things.

Consider this: rather than seeing your first home as the forever home, view it as a stepping stone – a practical entry into homeownership. This perspective allows you to prioritise your current needs without the pressure of predicting your distant future.

Myth 3: Your credit must be perfect to buy your first home

Contrary to popular belief, you don't need a perfect credit score to make homeownership a reality. In Australia, credit scores range from 0 to 1200, and while a score of 700 and above is generally considered good, lenders generally take a holistic approach to loan approval. 

Factors such as your income, spending habits, and the size of your deposit are equally important. Even if your credit score isn't perfect, you may still be eligible for approval

If you need quick cash or are considering applying for a personal loan to help with some unexpected expenses and are worried about your credit score, consider reading our blog about tips for first time borrowers. You could also consider Beforepay to access fast cash without hurting your credit score, for a fixed 5% fee. 

Myth 4: The best time to buy your first home is now

There's no "best time" to buy a home. It depends on market conditions and your own situation. Property expert Chris Gray says to buy when you can afford it and plan for the long term. 

Chris adds, “Make sure you pay to get some independent advice specific to you, to make sure you can afford it and can afford to hold on in the event of surprise events, and then just go and do it. I’m yet to find anyone that really regretted making a decision to buy. However, I’ve heard thousands of stories of people who wished they did buy earlier.”

Remember, buying a home is a big step, but armed with the right knowledge, you can feel ready and confident about making the right choice for you. Stay informed, explore your options, and enjoy the journey to owning your first home! 

Myth 5: Schools near your home only matter if you’re a parent 

The truth is, the reputation of schools in a particular area can significantly impact property values, regardless of your parental status.

So, even if you're not planning on having kids, picking a home in a top-notch school district can be a smart move. It can boost your property's value over time, serving as a solid investment. Recognising the importance of school quality can make a big difference in your decision-making process and add to the long-term value of your property.

For those wanting to check out school quality in their desired neighbourhood, websites like Soho and Good schools provide comprehensive information and ratings. 

Myth 6: Renovations always add value to your first home 

It's a common belief that any renovation automatically adds value to a home. 

However, not all renovations guarantee a positive return on investment. Before undertaking major upgrades, it's important  to conduct thorough research and assess the potential impact on the property's value.

Websites like Houzz, Hipages and Build can provide valuable insights and cost estimates for various renovation projects. 

Getting ready to buy your first home is a big deal! Stay in the loop with the latest info and changes to make the process smooth and stress-free. Being informed helps you make confident decisions on your journey to owning a home.

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