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Buying your first home in Queensland: A comprehensive guide

By Andrew Bell

The decision to purchase your first home is one you'll remember forever. Not only does this decision have long-lasting financial implications, but also impacts the lives of your current and future family, work opportunities and overall quality of life.

Emotions can range from nervousness to excitement, and it's perfectly normal to feel as though the first home buying process is daunting — but help is readily available. We're going to cover what first-time buyers need to know before purchasing their first Queensland home.

Three key considerations before buying your first Queensland home

There is no one-size-fits-all approach for first time buyers; the road you choose to go down is specific to your goals and financial situation. Consider how the following three factors may apply to you:

Financing options

It's common for first home buyers to pursue some form of financial aid when purchasing their first property. In Queensland, there are various financing options available to help alleviate some of the financial burden:

  • The Queensland first home owner grant: This grant is offered by the Office of State Revenue (OSR), entitling a first home buyer up to $15,000 toward their first home. This financial aid is only available if the property is valued at $750,000 or less.
  • First Home Owner Grant (FHOG): This grant offers new buyers up to $20,000 toward their first home, alongside a reduction in stamp duty costs, which refers to the tax levied on property transactions.
  • First Home Loan Deposit Scheme: Finally, this home owners grant provides first home buyers the opportunity to purchase their new home with a downpayment as minimal as 5%.

Deposit rates for first home buyers

While first home buyers may pay a different down payment depending on what home owners grant they opt for, a 20% down payment is considered standard. 

If the deposit is below 20%, it may lead to stricter mortgage conditions and the need for lenders mortgage insurance (LMI). LMI is insurance that safeguards the lender if the borrower fails to make mortgage payments.

A larger down payment results in a lower loan-to-value ratio (LVR). The LVR is calculated by dividing the loan amount by the property's purchase price. For instance, if a property costs $200,000 and the loan amount is $160,000, the LVR would be 80%. A lower LVR reduces the likelihood of first home buyers having to pay for LMI.

Therefore, while a lower down payment may seem like the yellow brick road, taking more time to save for a larger deposit can save first home buyers from the additional cost of LMI and improve their financial position by having a lower loan-to-value ratio.

Hidden costs

Upfront and hidden costs need to be taken into account when budgeting for a first home purchase. Common examples include:

  • Solicitor fees.
  • Land tax.
  • Building and pest inspections.
  • Lenders Mortgage Insurance.
  • Transfer duty charges.

First home buyers can increase or decrease the cost associated with buying their property depending on what they choose to opt in or out of, such as the choice to conduct rigorous property inspections. Consider chatting with a real estate professional to determine what costs will be applicable to your purchase.

The Queensland first home buying process

Following a period of diligent saving, first home buyers can embark on the exciting journey of considering where they want to make their purchase, and how they intend to go about doing so. Here is what they can expect throughout the home buying process.

Real estate analysis

Performing comprehensive research on the property market is crucial as it includes crucial elements like location, property prices, market trends and amenities within the neighbourhood. Ultimately, first-time homebuyers strive to make a purchase that will bring them long-term benefits — achievable by thorough property analysis.

For Queensland homebuyers, websites such as Ray White Surfers Paradise and Real Estate Australia showcase an abundance of properties for sale, and their associated costs and market trends. 

It's at this point in the journey where first home buyers will want to consider which suburb they would like to live in, what their maximum budget is and the type of property they want to invest into — whether apartment or townhouse.

Selling methods

Generally, homes are sold through one of the following three methods:

  • Auction: An auction is a regulated event where the property is sold to the highest bidder under the supervision of a licensed auctioneer. The 'reserve price' is the minimum amount at which the home can be sold. If the bids surpass the reserve price and you have the highest bid, you must sign the contract right away to finalise the purchase.
  • Tender: When buying your first property in Queensland through a tender process, you need to submit a single offer, usually with a 10-20% deposit. The seller will then either accept or reject your offer.
  • Private treaty: The vendor sets the selling price, and their real estate agent negotiates with potential buyers to negotiate a sale that reaches that price.

The typical way to find out how a home will be sold is by checking its website. If it's not available there, you can gather this information from the real estate agent.

Contractual implications

After choosing a home you wish to buy, you can make an offer either verbally or in writing. This offer generally includes the details of when and how you intend to pay the deposit, the price you are willing to offer for the property and the date of settlement, among other factors. Once the real estate agent receives your offer, they will prepare a contract for you to sign.

A contract generally becomes legally binding when both the buyer and seller sign it. However, there is a 5-day "cooling-off period" during which the contract can be cancelled or modified — except in the case of homes sold by auction, which do not have this period.

Prior to signing the dotted line, a first time home buyer should initiate a property inspection. A thorough inspection will help inform future negotiations — but it may deter individuals from the home entirely in the instance of significant structural issues, safety hazards or major repairs needed.

According to the Queensland Government, the main types of property inspection include:

  • Pest inspection.
  • Swimming pool inspection.
  • Solar system inspection.
  • Building inspection.

The Queensland Government also advises that first home buyers conduct inspections two to three days prior to the settlement agreement. Inspections may contribute toward a 'conditional sale,' whereby the sale is contingent on the satisfactory outcome of the inspections, and other factors including:

  • Financing approval.
  • Saleability of your existing property.
  • Homeowner's insurance approval.

Rely on real estate professionals and/or a solicitor for guidance on the specifics of a conditional sale based on your individual circumstances.

The settlement process

Property settlements vary based on the contract. Typically, the process includes finalising all necessary documentation and handling logistical aspects, such as securing financial approval and transferring funds.

The agreed-upon deposit may be required during the settlement process, once the contract becomes legally binding — generally following the cooling-off period. The timing and method of the deposit payment also depend on the contract's conditions, but it's typically made within three days of contract signing.

The new owners don't move into their property until the final settlement date, which is approximately 90 days after the settlement process begins.

The importance of seeking the guidance of real estate professionals

Most first home buyers choose to consult with both a solicitor and a real estate professional throughout the purchase process. This is because these professionals have the necessary expertise and insights to ensure the first home buyers aren't blindsided and are ultimately set up for success.

The role of a solicitor during the purchasing process includes handling legal documentation, conducting property searches, reviewing contracts, providing legal advice and representing the buyer's interests during negotiations and settlement.

On the other hand, a real estate professional — such as the Ray White Surfers Paradise team — assists first home buyers by helping them navigate the housing market, identifying suitable properties, arranging property viewings and providing guidance on pricing and negotiations. With our in-depth knowledge of the local market, we can offer valuable insights on property value and facilitate the transaction process.

Our team has an abundance of experience working with first home buyers to help them secure the home of their dreams. Reach out today to schedule a consultation with our expert real estate professionals and start your journey toward homeownership.

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