As a first home buyer, trying to get a home loan may seem super scary, especially when buying a house is one of the biggest financial decisions you’ll ever make (no pressure there!)

No doubt you’ve started looking into it and come across articles and websites full of bank-speak. It’s completely normal for your head to be swirling while you try to figure out the difference between offsetting and redrawing. Sure, a home loan might say it has a competitive low interest rate but what does that even mean?

We’re all human, we get it. It’s natural to fear the unknown until you have enough information to make practical, informed choices in your new situation. The good thing is there are some things that you can do to make the whole process a little less daunting.

Buying your first home is a journey but reading the steps below can give you an indication of what the journey might look like for you, so you can feel more empowered during this exciting time in your life. So, let’s begin…

Step 1: Planning

First things, first – start with a budget. Use our handy online budget planner to track your spending and see where you could pull your money to save.

If the word ‘budget’ makes you want to run and hide, it might be time to start looking at things from another angle. Why not pay your savings account a set amount each time you get paid? Make note of any outgoing expenses, leave yourself some treat cash for those mornings you can’t get by without a cappuccino, and then set up a regular transfer of what’s ‘left over’ using your internet banking and watch your savings grow.

Step 2: Saving for a deposit

So now you have started saving regularly for your deposit. But how much do you need to save for a deposit?

The more you can save for a deposit the better. As a guide, we recommend that you want at least a deposit of about 20% of the purchase price of the home you’re looking to buy. If you're not sure how to calculate your home loan repayment, use our online repayment calculator.

Heads up: If you have less than 20% deposit you will most likely need to pay a one-off payment, known as Lenders Mortgage Insurance to secure your loan.

Step 3: Consider the extra costs

When you buy a house, there are other costs you’ll need to cover. As a guide, set aside a further 5% of the property purchase price for things such as stamp duty, mortgage registration fees, pro-rata council rates and legal conveyancing fees.

Step 4: Do your research

There’s really no need to apply for multiple home loans from multiple lenders if you do your homework. You can use our online Key Facts Sheet generator to compare home loans.

Bonus tip: Really look at all the features and benefits of a loan and don’t be tempted solely by the lowest rate. Check the comparison rate, this is important. This is a true representation of the cost of the loan’s interest rate. It takes into account any upfront and ongoing fees that must be paid in relation to the loan.

Additional features such as an off-set account or the ability to make extra repayments without penalty and a redraw option can make a huge different to the total interest you pay.

When it comes to interest rates, as a guide, there are three choices:

• Variable rate – as the interest rate varies, so too will your loan repayments.

• Fixed rate – the interest rate remains fixed for a set period, which means your repayments remain exactly the same each month (great for budgeting).

• Split rate – as the name suggests, you can split your loan between fixed and variable.

Step 5: Check to see if you are eligible for government support

If you’re looking to buy or build a new home, you may be eligible for the Home Guarantee Scheme (HGS), an Australian Government initiative to support eligible home buyers to buy a home sooner. 

The HGS provides a guarantee that allows those on low and middle incomes to purchase a home with a deposit of as little as 5% plus some costs. The Family Home guarantee supports eligible single parent borrowers with a deposit of as little as 2% plus some costs. 

Visit the Support to buy a home | Housing Australia website to see what you could be eligible for. If you’re not sure which you qualify for, your lender or another financial adviser can help clarify any questions. Generally initial advice in this space is free so you can get multiple opinions and options to allow you to compare.

Step 6: Speak to an expert who cares

As with any loan, there are some really important things you need to consider before going ahead with one. It can be confusing when researching all your options online, so if you get stuck, give our locally based Customer Experience team a call, we'll be super-pleased to help.

Please note this information is general in nature and does not take into account your personal circumstances or objectives. You should consider this before acting on any of the information contained.