How to buy your first home

Buying your own home is still the great Australian dream. It is however one of the biggest financial and emotional decisions you'll ever make - and one that can seem daunting and fraught with potentially costly mistakes if you're not armed with all the right facts and figures.
So before you embark on your home ownership journey, print out our easy-to-follow checklist - just think of these tips as your all-important crib notes for buying that dream home.

1. Check the pennies - work out how much you can spend and repay.
Before you even start your search, make sure you can answer the following questions confidently:

• What is my budget? How much can I really afford to spend?
• How much can I expect to borrow?
• How much can I afford on loan repayments?
• Am I eligible for The First Home Owner Grant?
• Your finances will, of course, depend on your income/assets and living expenses.
  NB See OHSH "How to estimate the real cost of buying" for breakdown of expenses.

2. Choose a loan - and apply for it
When choosing your loan you should first consider the type of loan that best suits your needs (for example, a fixed rate or a variable rate), the interest rate charged and other fees and charges (which will vary depending on the loan product you select). Compare loans to find the best deal, and make sure you get the lender to explain all the loan features and costs.

3. Do your homework - research the market
Location, location, location! Yes, we know - its a cliche, but buying a home is a long-term investment and with all investments, it should appreciate - or have the potential to appreciate - over time, which means buying in an area with good growth prospects.

• Have property values in the area been going up and by how much?
• What facilities (e.g. schools, public transport, shops, access roads to major cities, parks) are nearby?
• Are there any major developments planned for the area that might affect property values in the future?
• Jump online and do some research or check through the local council.

4. Make an offer - negotiate a price
Once you've found your dream home, it's time to make an offer and negotiate a price and deposit amount (usually 10 percent).
Now, here's where it's really important to let your head rule your heart. Buying property, particularly your first home, is an emotional experience. But it's also a major financial investment that can affect you for the next 30 years, so remember - stay within your budget!

5. Arrange conveyancing
Conveyancing is simply when ownership of the property is legally transferred from the seller's name to the buyer's name. Although you can do this yourself with special do-it-yourself conveyancing kits, many prefer leaving it to a solicitor or conveyancer who specialises in this area.

6. Have the property inspected
You know those horror stories about termites eating through and destroying people's homes? Well, it actually does happen so it's important to have both building and pest inspections done before you sign on the dotted line and also before you bid at an auction.

7. Exchange contracts and pay the deposit
Your loan's been approved and the inspection reports are good. Time to sign and exchange contracts. You'll now also need to pay the agreed deposit amount.

8. Cooling off period (for private treaty sales)
In most cases you are generally entitled to a cooling off period. The cooling off period can be used to undertake further checks (such as a pest inspection) or ensure the purchase decision wasn't made in haste - you may be able to withdraw from the contract during this period.

The rights, obligations and rules surrounding cooling off periods may vary from state to state so it's always a good idea to check with your lawyer or conveyancer as to whether a cooling off period is available to you. For example, if you buy a property on the day of an auction, in the name of a company, by assignment or by tender, you probably won't have cooling off rights. So it pays to check!

9. Arrange insurance and final check
Better safe than sorry. You won't need to insure your property until it's legally yours on the date of settlement, but it's still worth taking out insurance even before settlement in case the seller doesn't have a current insurance policy. If they don't, and if the property is damaged, you'll be stuck with the costs. Not good. You will, however, need insurance with your lender's name included as an interested party (mortgagee) before the lender will provide you with the funds to enable you to settle your purchase.

It's also worth a final inspection of the property just before settlement to make sure everything is as it should be.

10. Settlement
Yippee! After a normal period of four to eight weeks from the exchange of contracts, you can finally pick up the keys to your dream home.