QLD First Home Buyer Essential Guide

Your complete guide to

All Things First Home

The Money Part

The Building Part

Go you good thing!

This guide has been specifically put together to arm you with the right information so you can get into your first home with all the confidence of a seasoned investor.

We also have an expert team on stand-by who know all things First Home and finance. Simply scan the QR code and slide into our DMs, our team are more than happy to help with any questions you have along the way.

Let’s Get You Started

Like many firsts, building your first home can be both an exciting and scary experience.

As one of the biggest milestones in your life, knowledge is going to be key.

When building your first home there are three key areas you need to focus on:

HomeLandFinance

Let’s break down the basics.

You’ve made the big decision to buy your first home.

Serviceability

Yep it’s all in the name, serviceability simply put is your ability to service the loan.

When taking out a loan, one of the key things the bank takes into consideration is your capacity to make and meet regular repayments based on your income and ongoing expenses. The serviceability of the loan will determine if and how much you can borrow.

Deposit

Your deposit is what you contribute, as opposed to what you borrow from the bank. Heads up, saving your deposit is hard work even if you skimp on the smashed avos –but not impossible! More on this later.

Finance glossary

Finance terms can sound like a completely different language, but this little cheat sheet will have you talking like Warren Buffett in no time.

Asset

When applying for a home loan you will be asked if you own any assets. Your version of an asset may differ to a bank’s version of an asset - so think of it as being anything you own of value that can be converted into cash.

Vehicles and shares are assets, your arts degree, while incredibly useful … is not.

Pre-approval

Pre-approval is an exciting step in the home loan journey. It means that a lender has poked around your finances and decided that they’ve liked what they’ve seen and are happy to lend you the money. This means you have a clear idea of what you can spend and buy. Depending on the T&C of the bank, a pre-approval usually lasts 3 months so remember to check this with your bank of choice.

Loan to Value Ratio (LVR)

Loan to Value Ratio (LVR) is the percentage of money you are borrowing from the bank compared to the total value of your property. For example if your property value is $600,000 and you are borrowing $400,000 from the bank, your LVR is 80%.

Great news is, the larger your home deposit or the more equity you have in the property, the lower your LVR will be.

Lender’s Mortgage Insurance

Lender’s Mortgage Insurance (LMI) is generally paid when you take out a loan that is worth more than 80% of a property’s value to protect the lender in case you can’t make your repayments. There are ways around paying LMI which we’ll dive into shortly.

Comparison Rate

Comparison rates help you, yep you guessed it, compare your rate of your loan with other lenders. It calculates the amount, term length, repayment frequency, interest rate, and any additional fees connected with the loan so you can get an accurate overview.

Interest

Simply put, Interest is how much money you pay your bank or lender to borrow their money. Interest comes in two forms, that is Fixed or Variable.

You’re hearing a lot about interest rates at the moment because the Australian Reserve Bank is lifting its key interest rate which unfortunately needs to be passed onto the customer. Yay.

Split Loans

Can’t decide if you want a fixed or variable loan? Why not have both.

A split loan means that your loan balance gets split into two portions, one with a variable interest rate and one with a fixed rate, giving you both flex and certainty. Woo!

Draw down

We’re here now, so let’s explain a draw down.

The construction of your new home may consist of a few different build stages. If you’ve taken out a construction loan, your lender will make progress payments throughout each stage of construction, this is your draw down of your loan.

Fixed Interest Rate

Yep you’ve got it, a fixed interest rate means that your interest rate will be locked in. This is a great option if you are after more certainty on what your regular repayments will be through your fixed term.

Unfortunately, you can’t lock in your rate for the full life of your loan, the fixed term differs from lender to lender but is usually between 1 to 5 years.

Variable Interest Rate

Opposite to a fixed rated, a variable interest rate is one that may change over the life of your loan. Depending on what is happening in the market, your lender may increase or decrease the amount of interest you pay which affects your total repayments. The lower the rate, the less you pay, the higher the rate, the more you pay. Pretty simple.

Repayments

Now that your loan has kicked in, it’s time to start paying it off.

Lucky for you, it’s usually spread over 30 years and in bite size chunks.

Repayments are the regular amounts you pay and are calculated based on what’s owing on your loan, loan term and interest rate (Fixed, Variable or Split). There are two key types of repayment methods, P&I or interest only.

Principal and Interest a.k.a P&I

Most home loans (especially for First Home Buyers) are P&I loans. This means that when you buy a home, you’ll pay some money to the bank on interest and some money to pay off the loan (this is your principal). This means that one day you will eventually own your entire home. Big smiles!

Construction Loan

Believe it or not, there are a couple different types of loans out there.

If you’re building a new home and are required to make draw down payments (more on this shortly), you will need to take out a construction loan.

A construction loan is specifically structured to benefit the home buyer, that’s you! Unlike a regular home loan where the full funds are available in one lump sum, a construction loan releases funds in ‘progress payments’ as your build is underway. This means you only pay interest on the money that has been paid up until any given stage, meaning more money in your pocket while you build.

Stamp Duty

Stamp duty is a government tax which varies depending on where you live, the type of transaction taking place, and its value.

Enough with the bad news though. You can avoid paying stamp duty if you’re a first home buyer and you buy a home under a certain value.

Equity

Equity is the market value of the home (which won’t necessarily be the price you purchased it for) minus what you owe. Equity is something you can earn while you sleep just from your property rising in value over time. You’ll also get equity when you pay down your loan. The best way to calculate equity is to take the current property value and subtract the loan balance.

Louder for the first home buyers in the back!

Let’s chat budgets

We don’t want to be a buzzkill but when you start looking to buy a home, one of the first things you should do is think about your budget.

You’ll need to think about how much you have saved, what your borrowing capacity is, whether you qualify for government schemes, and how to get yourself match fit for a home loan.

If that’s all sounding a bit much we recommend speaking to a mortgage broker. They do this day in and day out and can help you quickly! We work with MAB who are whizzes at all things construction home loans and are ready to help you reach your savings goals.

Scan here to chat

Borrowing capacity

We all love the online calculators that provide an indicative borrowing capacity, however these are indicative only and don’t factor in all the key things lenders look out for.

When you first speak to a mortgage broker or lender one of the first things they’ll do is work out how much you can borrow and what your repayments will look like. They’ll look at your income, your expenses, and your spending habits to decide what they think they can comfortably lend you

While it can be very tempting to borrow the maximum amount, remember to give yourself some leeway. Circumstances can change, interest rates can rise (we’re looking at you RBA!) and you don’t want your mortgage to cause undue stress. Last but not least, you’ll still need some disposable income to treat yourself!

Knowing your borrowing capacity will empower you to start making smart decision when it comes to housing and can save a lot of time when shopping around.

Tip

If you’re planning to have kids, or leave your job - don’t be scared to let your mortgage broker know! They’ll help you work out your borrowing capacity for a number of different scenarios and make sure you can still repay your loan if your income takes a hit.

Macrossan 29 with Hamptons Vineyard World of Style

Deposits

When you buy a house, you pay a deposit and the rest will be made up of your home loan or mortgage. Lots of people aim for the 20% deposit to avoid paying Lender’s Mortgage Insurance (LMI). The ball is entirely in your court when it comes to LMI, but it’s worth remembering you don’t actually need 20% to buy a home.

Ears perking up?

Rightyo, let’s dive into it.

Lean on those closest to you...

Bank of Mum and Dad

Ahhh, the bank of Mum and Dad (BoMD). The BoMD is when parents kick in money as a cash gift or use accessible equity in their home to give you a leg up onto the property ladder. Most banks require a statutory declaration that the money is a gift and not required to be paid back.

Guarantor

A guarantor loan is different to using the bank of mum and dad because money doesn’t actually change hands. A family member can choose cash or equity from their home to use as security against your home loan, and they won’t need to give any funds directly to you (the borrower). Guarantor loans can reduce the amount of deposit you need too.

Whether it’s the BoMD or a Guarantor Loan - It’s a big decision for all parties to make, so ensure you dot your i’s and cross your t’s before jumping into any arrangements.

If you can’t access the BoMD, fear not, you can still conquer your dream of home ownership! Let’s go through your options…

First Home Guarantee (FHG)

The Federal Government’s First Home Guarantee helps first home buyers buy property with as little as a 5% deposit. It was previously known as the First Home Loan Deposit Scheme.

It works by allowing first home buyers to:

+ Purchase a home with only a 5% deposit

+ Avoid having to pay Lender’s Mortgage Insurance (LMI).

The guarantee works by reducing those huge upfront costs, so you can jump on the property ladder sooner.

If you’re a single parent, you have additional government help going solo, the Family Home Guarantee Scheme is one that’s been created just for you! It works in a similar way to the First Home Guarantee but allows eligible single parents to purchase a family home with as little as a 2% deposit.

First Home Super Saver Scheme (FHSSS)

It’s a bit of a mouthful and it’s a little tricky to understand this one so stick with us. This one allows people to save money for their first home inside their super fund.

Yep, easy so far but why would you do that you ask?

Well, in your super fund, income is only taxed at 15%, whereas outside of super, your income is taxed at your marginal rate – which could be up to 45%, depending on how much you earn.

The FHSSS allows you to park your deposit savings in your super fund, and then release them when you’re ready to buy your property.

Take note of the rules: you can park up to $15,000 per financial year in your super fund, but these can’t be the payments that come from your employer. They must be additional contributions that you’re putting into your fund either before tax, or after tax.

Paddington 22 with Capri World of Style

Buy Now Pay Later (BNPL)

While we love Afterpay and the likes, BNPL is a red flag for our lender friends. They see it as credit, a.k.a money you owe, and it can impact the amount they’re willing to lend you. If you’re wanting to buy a home, pay off what you owe and pause on the Afterpay for a bit. You’ll thank us later.

Get Home Loan Matchfit.

When you apply for a loan, someone will lift the hood on your finances and take a poke around to understand more about your financial position. Having someone snoop around your spending can seem a little invasive, but rest assured they’re only looking to ensure you can comfortably cover potential repayments.

Lenders will typically look at around 3-6 months of spending so it’s a good idea to give your spending habits a once over and see what you can pull back on. To our “subscribed-to-every-streaming-service” friends, we know your Friday nights are sorted but it might be time to choose between one or two.

What else do Lenders look for? We're glad you asked!

Here’s a few of the other things they’re pretty funny about…

Credit Cards

Even if you’re a savvy airpoint-collecting-credit-card holder that always pays your credit card on time, your lender will still see your card as a liability.

They’ll look at what your total limit as well as your repayments when considering how much to lend you. It can be wise to close your credit cards before you apply for a home loan to increase your borrowing power.

Betting

While we don’t want to rain on your parade, regular betting can impact your borrowing power. Apologies in advance for those buying over spring carnival.

Genuine Savings

Nothing makes a lender smile more than proof of genuine savings.

Cars

Time to tap onto public transport. Repayments on a car can seriously dampen your borrowing capacity. A 10k loan can reduce your borrowing capacity by tens of thousands of dollars. Sob.

Genuine savings are proof that you can regularly stash money away in your savings account. If you’re getting help with your deposit, this is even more important. Start squirreling away regular amounts for 3-6 months before you apply for your home loan.

Need help getting buying ready?

Chat to our finance partner!

Valuation Fee

An external valuer will perform an assessment on the property you’re looking to buy. This will help determine how much the lender will lend you.

But wait, there’s more!

(Sorry!)

We hate to be the bearer of bad news, but it’s not just the deposit that you need to save for. When you buy a home there will be a few upfront costs you’ll need to be aware of when setting your budget and saving for a home.

It’s like the old saying goes - It’s what you don’t know that gets you in trouble.

Lender’s Mortgage Insurance

Lender’s Mortgage Insurance comes into effect if you borrow more than 80% of the property’s value. This doesn’t apply if you are part of the First Home Guarantee (FHG) or if you use a guarantor.

Legal and Conveyancing Fees

Solicitors and Conveyancers are essential hires when buying a property. They will prepare all the required documentation and be the middle man between you, the bank, and the vendor. You can choose to hire a Solicitor or a Conveyancer when buying a home - the choice is yours.

Loan Establishment Fee

A one-off upfront cost to establish your loan. It can be referred to as an application fee. It will cover the cost of one valuation, settlement attendance fees, and legal fees for the bank.

Stamp Duty

Stamp Duty is a bigggg cost (5% of the purchase price) that all homebuyers need to be aware of. But like we said, stamp duty concessions are available for first home buyers in each state, so there’s ways to avoid it! We’ll touch on that later.

Security Guarantee Fee

A fee is charged if you have a guarantor putting up security towards your home loan.

Home Loan Fees

There are fees associated with the actual home loan. These include application fees, settlement fees, document preparation fees, and valuation fees.

They vary per bank and per loan but we’ll go ahead and break these fees down for you so you know exactly what to look for.

Rate Lock Fee

A fee paid by borrowers looking to have a fixed-rate loan for their mortgage. This will ensure that your fee rate is locked from the application to the first repayment.

Documentation Preparation Fee

Your lender might charge a fee for any home loan contracts prior to contract approval.

As a general rule of thumb, we say to set aside approx $3k for fees that sit outside of your stamp duty and LMI. If you’d like more info or some more exact numbers, our mates over at MAB are there to help!

$550k H&L purchase in QLD $600k H&L purchase in QLD

FHBG & FHOG LMI FHBG & FHOG LMI

Value of Property $550,000 $550,000 $600,000 $600,000

Government Costs / Fees $2,634 $2,634 $6,091 $6,091

Conveyancing / Incidentals $2,500 $2,500 $2,500 $2,500

Funds Required $555,134 $555,134 $608,591 $608,591

Savings Required $17,634 $36,134 $23,591 $43,591

FHOG $15,000 $15,000 $15,000 $15,000

Base Loan Amount $522,500 $504,000 $570,000 $549,640

Lenders Mortgage Insurance $0 $17,752 $0 $19,372

Capitalised Loan Amount $522,500 $521,752 $570,000 $569,012

Funds Available $555,134 $555,134 $608,591 $608,591

Minium Gross Income Required - Singles $100,000 pa $110,000 pa

Minium Gross Income Required - Couples (No Dependents) $115,000 pa $125,000 pa

$650k H&L purchase in QLD $750k H&L purchase in QLD

FHBG

Value of Property $650,000 $650,000 $750,000 $750,000 Government Costs / Fees $11,277 $11,277 $13,705 $13,705

Conveyancing / Incidentals $2,500 $2,500 $2,500 $2,500

Funds Required $663,777 $663,777 $766,205 $766,205 Savings Required $31,277 $52,777 $63,205 $63,205

FHOG $15,000 $15,000 $15,000 $15,000

Base Loan Amount $617,500 $596,000 $688,000

Building JargonExplained

When you enter the world of building there’s a whole lot of new terms to wrap your head around.

Here’s a quick guide to terms you might come across in the building process…

Land Estate Covenants

This will give you the developers’ design guidelines for your estate. It is important to understand the impact these may have on the house you intend to build.

Titled Land / Registered Land

Titled land means there is an official record of who owns a certain section of land. Details aside, the important takeaway is that if your land is titled/ registered you’ll be able to build on it right away. If your land is untitled/unregistered you’ll need to wait for the relevant ownership certificate to be issued before starting construction.

Civil engineering plan (Functional layout plan)

Explains the site conditions of your land before and after it has been developed. It includes information such as services and finish surface levels.

Memorandum of Common Provisions

This document informs you of council enforced controls and restrictions associated with the title of your land. These are fixed controls that are registered on the title.

Building Location Envelope

Building envelopes set design parameters for development on a lot. These design parameters can be described by diagrams, plans or written descriptions, or a combination of both. Build parameters in which an estate or established area may regulate wherein the house build should take place inside of. This allows for consistency of houses to have the same or similar setback requirements, the profile of the build to be within the envelope as a set requirement. These could be found in Plan of Subdivision (or Plan of Development), estate covenants, or as a separate document.

Fall

Fall refers to the level of slope on your land. Think of it like a reference to how much the land “falls” from the highest point.

Generally, you will see Greenfield land with 1m of fall, meaning the block falls 1m from the highest point.

Easement

Plan of Subdivision (or Plan of Development)

A Plan of Subdivision (or Plan of Development)

Gives us the exact boundaries and location of your block with reference to the surroundings and potential restrictions that may apply.

Fill

Fill is when earth is used to raise the land on your block to bring it to ground level, creating a flat building pad.

You may hear this term when we talk about flattening your block of land. We will look at “cutting and filling”, where we will “cut” your land that sits above ground height and “fill” the area that sits lower. This provides us with a flat building pad for your new home!

Did that make sense? Let us draw diagram to help explain:

Cut Fill

An easement is a legal right to use another’s land for a specific limited purpose. Easements can impact which designs will work on your block. This information can be obtained by contacting the owners of the easement (ie: council, water authorities) or from your Plan of Subdivision.

Building Envelope

This plan shows you the depth, width and height restrictions applicable to a specific block. This effectively gives you the dimensions of the build area to show you where your house can be positioned on your block.

Retaining Walls

These are used to retain the earth on your land if required. In the case where a block of land is too close to a boundary and we can’t fully cut or fill it, we will need to build a retaining wall that holds the soil and ensures a flat building platform can be achieved.

Site Coverage

Site coverage refers to the area of land covered by an existing or proposed building. For example, if your block was 400m2 and your new home’s footprint was 200m2, your site coverage would be 50%. Quick math!

BAL rating

For obvious reasons, BAL ratings are super important in Australia. BAL ratings measure the severity of a building’s potential exposure to fire, and this rating dictates both the construction methods and materials used in bushfire prone areas. Government legislation ensures every block of land is classified for a Bushfire Attack Level (BAL).

Site Costs

Before building can commence your builder will need to establish a level and stable block of land to ensure your home sits at the right level and that drainage, easements and neighbours foundations are protected. As a guide, the biggest impact to site costs will be fall of land and the soil conditions. Therefore, site costs will vary from block to block, depending on the complexity of the work required.

House

Quality Inclusions

Quality inclusions are the inclusion items that you receive in your new home as part of the base house price. In other words, these are the items you receive without paying extra for upgrade packs.

Facade

This is the front of the house a.k.a what you see from the street. If you are looking at a display home and love the internal layout but don’t like the look from the front don’t be disheartened; it will be interchangeable, meaning you can have the same house design with a completely different look on the outside.

Orientation

Orientation is the positioning of a building in relation to seasonal variations in the sun and wind. Good orientation, taking into account your climate, can increase the energy efficiency of your home, making it more comfortable to live in and minimise your heating and cooling costs.

Setbacks

Setbacks are the controls that limit the footprint of your home and relate to all sides of your block (front, sides and rear). Setbacks also apply to building height, for example a single storey wall may be allowed closer to a boundary than a double storey wall.

Customer Project Manager

This is the person that ensures your building runs smoothly! Not all builders include a Customer Project Manager so it’s wise to check what level of service you can expect from your builder.

Double-glazing

A double-glazed window (also known as Insulated Glass) is commonly made up of two panes of glass and is a great choice for someone looking to conserve energy with the added benefit of minimising noise.

HIA Contract

When building a house, you will receive a building contract as your legal agreement which binds you and the builder for the construction of your new home. There are several types of contracts, however we use residential building contracts issued by the Housing Industry Association (HIA). You will receive your final fixed price contract to sign at your Contract Appointment.

Set backs

Established or new?

On the fence between buying an establishment or building a new home? There’s pros and cons with both and it’s completely up to what feels right for you.

Established

A New Home

Established homes may suit you if you’d like to…

+ Move into your first home quicker

+ Dabble in a bit of DIY if you opt for a fixer-upper

+ Potentially live closer to the CBD

A new home might suit you if you’d like to…

+ Customise your home to suit you! Depending on what you build, you can choose everything from facades, colours, fixtures, fittings, landscaping and more;

+ Take advantage of the First Home Owners Grant available on new home builds;

And look, we don’t want to sound like your parents but if you’re buying established, you should always check the property carefully before you buy. If you discover problems with the property after an offer goes unconditional, you may not be in a position to have them rectified. A building inspection report will cover everything from roof, walls and ceilings, any signs of cracks or signs of erosion, plus electrical wiring and plumbing.

+ Skip expensive renos or nightmare DIY jobs;

+ Be the first to live in your home; and

+ Live in a master planned community with all the amenity you need on your doorstep

Choosing your builder

So, you’ve decided to build your first home.

Choosing who to build your first home can be a stressful decision and there’s plenty to consider.

We’ve got your back though, here’s everything we’d like you to ask your builder to ensure you’ve found your perfect match. home build and be available to answer your questions.

Do they offer a structural, material and workmanship guarantee?

How much deposit do you need to pay?

What will the progress payments look like?

And this one’s important for our first home buyers - does the builder offer fixed price contracts?

What inclusions will your home come with?

Do you understand what’s not included?

Do they have a wide variety of home designs?

Are there other options available if you want to adjust your home design?

What energy rating will your home achieve?

Does your home price include all requirements for a 6-star energy rating?

Do they have a Customer Project Manager who will help you along the way?

Will you have a Construction Supervisor who will manage your home build and be available to answer your questions?

Must have Happy without

Finding your perfect home

Once you’ve got your finances sorted, it’s time to start the exciting part –finding your dream home!

This is the part where you’ll be scrolling various real estate sites a few times a day, heading along to countless inspections, or visiting a number of display homes to find the right one.

Before you jump in, know your non-negotiables and recognise the wants. Remember, every extra feature or room you want adds a cost to your mortgage.

You might find it helpful to make a list and ask yourself, do you really need the fifth bedroom and third bathroom, or can it wait for the next home?

Identifying the essentials could save you money and stop you wasting time looking at the wrong houses.

Open plan living, dining and kitchen area

Ensuite to master bedroom

Large kitchen

Three+ bedrooms

Two living areas

Alfresco or backyard space

Secure garage/carparking

Separate Laundry Add your own!

Resale Opportunities

Potential resale should also be front of mind. It’s easy to let emotions take over when looking for a home to live in, but be conscious of the location, return, desirability and resale value of the home you’re looking at. Things like a north-facing orientation, great floorplan, size, security and privacy all add value to your home.

FIRST

HOME BUYING REDEFINED View the PDX range

options

A standard in sophistication, this thoughtful range has been designed with the discerning buyer in mind. It’s family living perfected where our impressive double and single storey floorplans are made to suit you and yours with family, rumpus or theatre rooms to help create that special feeling of togetherness.

The Prestige is suited to first home buyers who want 100% customisation, guided with face-to-face consultations, luxurious designer inclusions, and all the trimmings of what you’ve come to expect from Porter Davis and World of Style.

A completely personalised journey where you’re in charge of designing your dream home, guided by our World of Style Interior Designers

Sophisticated luxury as standard with designer inclusions and specifications

Wide range of single and double storey homes with countless design options available.

THE AWARD WINNING HOME RANGE

View the Prestige range

House & Land

House and Land is for those who want to buy a block of land and a house in one simple purchase. And look, we don’t mean to brag, but our house and land team are pretty snazzy when it comes to finding the best blocks and pairing it with the best house. You’ll avoid any surprises with 100% fixed prices too.

The obvious one – you choose where you want to live!

Located in key growth areas in communities throughout Victoria and Queensland

Take advantage of stamp duty savings, grants and other financial incentives

Our house and land packages are all fixed price so there’s no surprises

Available as a single or double-storey homes with 3-4 bedrooms, they suit couples right through to families

View our House & Land packages

PDRE

Think of PDRE like a priority boarding ticket. You’ll get a brand new home but skip the long wait. When you purchase a readybuilt home, you’ll be buying a home that’s already under construction so you’ll be able to move in within 90 days.

Complete turnkey solution (including landscaping)

Move in within 90 days

Great for buyers who are leaning towards an established home but still like the idea of something brand new

All the hard work is done for you with pre-determined colour schemes created by our professional Interior Designers

View the PDRE range

PORTER DAVIS REAL ESTATE

So, what does the building journey look like?

So you’ve made the big decision and you’re ready to build?

Exciting stuff! And getting started is easy peasy.

Different ranges will have slightly different processes and timelines which we have outlined below.

That’s it!

Well, there you have it. If all of this is sounding good, reach out to our team for a friendly, no-strings attached chat.

From our New Home Consultants during the sales process to your dedicated Customer Project Manager and Construction Supervisor, our team is on hand to guide you through the home buying process from start to finish until you get those keys.

We’re available online or face-to-face (old-school!) seven days a week and no matter where you are – be it renting or living at home – we are positioned to help you take the next step.

MORE THOUGHT BUILT IN