Buying your first home is an exciting milestone, but it can also feel overwhelming. Between securing finance, attending inspections, making offers and signing contracts, there is a lot to understand before you receive the keys to your new home.
If you're a first home buyer in NSW, knowing what to expect can help you avoid costly mistakes and make informed decisions throughout the process.
Here are some important things to consider before purchasing your first property.
1. Understand Your Budget Before You Start Looking
Before attending open homes, it's important to understand how much you can comfortably afford to borrow.
Speaking with a bank or mortgage broker can help you understand your borrowing capacity and obtain loan pre-approval.
However, pre-approval is not the same as unconditional loan approval. Your lender may still need to assess the property and confirm your financial circumstances before approving the loan.
You should also budget for expenses beyond your deposit, including:
Transfer duty (commonly called stamp duty), if applicable
Legal and conveyancing fees
Building and pest inspections
Strata inspection reports, if purchasing an apartment or townhouse
Loan establishment fees and other lender charges
Moving costs and ongoing property expenses
Understanding these costs early can help you avoid unexpected financial pressure.
2. Are You Eligible for First Home Buyer Benefits?
One of the biggest advantages of buying your first home in NSW is that you may be eligible for government assistance.
First Home Buyers Assistance Scheme
Eligible first home buyers in NSW may receive an exemption or concession on transfer duty.
Under the current scheme:
Properties valued at $800,000 or less may qualify for a full transfer duty exemption.
Properties valued above $800,000 but below $1 million may qualify for a reduced rate of transfer duty.
Eligibility requirements apply, including rules relating to previous property ownership and occupying the property as your home.
Australian Government 5% Deposit Scheme
Eligible first home buyers may also be able to purchase a property with a deposit as low as 5%, without paying Lenders Mortgage Insurance, through the Australian Government 5% Deposit Scheme.
Property price caps, lending requirements and other eligibility criteria apply.
Before purchasing, it's worth checking which benefits may be available to you, as these can make a significant difference to your upfront costs.
3. Have the Contract Reviewed Before You Sign
When you find a property you love, it can be tempting to move quickly, particularly in a competitive market.
However, it's important to have the Contract for Sale reviewed by a solicitor or conveyancer before exchanging contracts.
The contract contains important information about the property and your legal obligations.
Your solicitor or conveyancer can review matters such as:
The property's legal ownership
Easements and restrictions affecting the land
Special conditions included in the contract
Deposit requirements
Settlement dates
Potential issues that may affect your purchase
Understanding what you're agreeing to before becoming legally committed can help prevent problems later.
4. What Is a Cooling-Off Period?
In NSW, most residential properties purchased by private treaty have a five-business-day cooling-off period after contracts are exchanged.
During this period, a buyer can generally withdraw from the contract, but will usually forfeit 0.25% of the purchase price.
For example, if you purchase a property for $900,000 and withdraw during the cooling-off period, the penalty would generally be $2,250.
Importantly, not every property purchase includes a cooling-off period.
Properties purchased at auction generally do not have one. A buyer may also waive their cooling-off rights by providing a Section 66W Certificate.
For off-the-plan residential purchases, a 10-business-day cooling-off period generally applies.
Before exchanging contracts, make sure you understand whether a cooling-off period applies and what it means for your purchase.
5. Don't Forget Your Property Inspections
A property may look perfect during an open home, but there can be issues that aren't immediately obvious.
Depending on the property, you should consider obtaining:
Building and Pest Inspection
This can help identify potential structural defects, pest activity and other issues that may require attention.
Strata Inspection Report
If you're purchasing an apartment, unit or townhouse within a strata scheme, a strata report can provide valuable information about the building's financial position, meeting records, planned works and potential special levies.
These inspections can help you better understand what you're buying and whether there may be additional expenses in the future.
Where possible, arrange inspections before exchanging contracts, particularly if you're purchasing at auction or waiving your cooling-off rights.
6. What Happens After Your Offer Is Accepted?
Having your offer accepted is exciting, but it doesn't necessarily mean you've secured the property.
In NSW, a property purchase generally becomes legally binding when contracts are exchanged.
Once contracts have been exchanged, the conveyancing process moves towards settlement.
During this time, your solicitor or conveyancer will work with the relevant parties to complete the legal requirements of the purchase.
This may include arranging property searches, reviewing adjustments, coordinating with your lender and preparing for settlement.
7. What Is Settlement?
Settlement is the final stage of the property purchase process.
This is when the balance of the purchase price is paid and ownership of the property is transferred to you.
In NSW, settlement commonly occurs around six weeks after contracts are exchanged, although the timeframe can vary depending on the contract.
Your solicitor or conveyancer will coordinate the legal settlement process and liaise with your lender and the seller's representative.
Once settlement has been completed, you can usually arrange to collect the keys from the real estate agent.
Congratulations — you're officially a homeowner!
8. Common Mistakes First Home Buyers Should Avoid
Buying your first property involves significant financial and legal commitments.
Some common mistakes to avoid include:
Making an offer without understanding your financial position
Signing or exchanging contracts without obtaining legal advice
Assuming finance pre-approval guarantees final approval
Failing to arrange appropriate property inspections
Overlooking strata fees or potential special levies
Assuming every purchase has a cooling-off period
Not allowing enough money for additional purchasing costs
Taking the time to understand the process and seek advice early can help make your first property purchase a smoother experience.
How Freshwater Legal Can Help First Home Buyers
At Freshwater Legal, we understand that buying your first home is a major milestone.
We also know that the legal process can feel unfamiliar, particularly when you're purchasing property for the first time.
Our team can guide you through each stage of the conveyancing process, from reviewing your Contract for Sale to completing settlement.
We take the time to explain things in plain English, answer your questions and help you understand your rights and obligations before making important decisions.
Whether you're buying your first apartment, townhouse or family home on Sydney's Northern Beaches or elsewhere in NSW, we're here to help make the process as straightforward as possible.
Buying your first home?
Contact Freshwater Legal before signing or exchanging contracts. Getting the right advice early can help you purchase with greater confidence.
This article provides general information and does not constitute legal or financial advice. Government schemes, eligibility requirements and legal obligations may change. Advice should be obtained based on your individual circumstances.