What you need to know before buying first home: Canstar

With house prices finally plateauing and dropping in some areas, research company Canstar has outlined what would-be first home buyers should be aware of. Photo / 123RF

With house prices finally plateauing and dropping in some areas, research company Canstar has outlined what would-be first home buyers should consider before putting a foot on the elusive property ladder.

The retail and business finance research company is urging first home buyers to make sure they are properly prepared before they try to enter the market.

"The obvious place for people to start is looking is at mortgage providers, the rates they offer and the services they provide," said Canstar general manager Jose George.

"It's worth putting the time and effort into familiarising yourself with terminology as well as researching current lending rates as getting the best deal can save thousands of dollars in the long run."

While acronyms like LVR (loan-to-value ratio) , DTI (debt-to-income ratio), QV (quotable value), CV (capital value) and LIM (land information memorandum) could seem overwhelming, they are important to come to terms with.

According to Canstar's online comparison tables, the difference between the highest and lowest advertised two-year fixed rate (80 per cent LVR) home loan for first home buyers is 0.7 percentage points. In dollar terms this could mean paying an extra $142 per month if servicing a $350,000 loan over a 25-year period.

"Rates are obviously very important but first home buyers should also look at what help is on offer. There is a lot of support being offered by home loan providers and our advice is to take whatever you can get," George said.

"The process of buying your first home is exciting but also usually a huge learning curve that can be a bit of a bumpy ride in places. Getting the right advice and support at the right time can make a world of difference and save you stress and money in the long term."

Things first home buyers should do:
• Gather evidence of income and outgoings.
• Research the market and the area where you are looking for a property.
• Do your homework on the house.
• Get legal representation, at least before you sign a contract.