What first home buyers should understand before making an offer
Before you put in an offer on your first home, make sure you understand your budget, pre-approval, contract conditions and costs.
By Moss McEwen
2 min read
You've been to what feels like a hundred open inspections, and finally, there it is — the one. Before you put in an offer, here are a few things worth understanding. A little preparation can help you buy with confidence.
1. Know your real budget
Your budget isn't just the maximum a lender might offer. Think about:
- Your comfortable repayments — including a buffer for rate changes and life's surprises
- Upfront costs — such as stamp duty (unless a concession applies), conveyancing, building and pest inspections, lender fees and moving costs
- Ongoing costs — council rates, water, insurance and maintenance
Knowing your full budget helps you set a sensible limit — and stick to it.
2. Understand what pre-approval means
Pre-approval is a lender's indication of how much it may lend, based on the information provided at that time. It's useful, but it's conditional:
- It usually has an expiry date
- Final approval depends on the property (often including a valuation)
- Your circumstances need to stay the same — avoid new debts or job changes if you can
Make sure you know the conditions attached to your pre-approval.
3. Read the contract (with help)
In South Australia, property contracts and the cooling-off rules have their own specifics. Your conveyancer or solicitor can explain the contract, any special conditions and your obligations before you sign. Ask about:
- Finance conditions and how long you have to get formal approval
- Building and pest inspection conditions
- The deposit — how much and when it's due
- Settlement date — is it realistic for your lender's timeframe?
- Cooling-off rights and whether they apply to your purchase
4. Check what schemes may apply
There may be government assistance available for first home buyers. Eligibility criteria, price caps and availability change, so check what currently applies before you make an offer — it can affect your budget.
5. Buying at auction is different
If you're bidding at auction, you'll generally need to be ready to sign an unconditional contract on the day. That means having your finance, inspections and budget sorted beforehand. Talk to your broker and conveyancer before auction day.
6. Keep your broker in the loop
When you find a property you're serious about, let me know. I can help you think through the numbers, check that the property type suits your lender's policies and get things moving quickly once your offer is accepted.
Buying your first home is a big step — but it doesn't have to be overwhelming. Take it one step at a time, and ask all the questions you need to.
General information only. This article doesn't take into account your objectives, financial situation or needs. Lender criteria change and all finance is subject to approval. Speak with me about your situation, and with your accountant or financial adviser for tax or investment advice.
Moss McEwen
Mortgage and finance broker at Bay Finance Co, based on the Fleurieu and helping clients across Adelaide and Australia. Former café owner, chef and small business operator. More about Moss
