8 potential strategies for first home buyers in a highly competitive market

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The COVID-19 pandemic resulted in a property boom that no one saw coming. To this day, property prices continue to soar despite 13 interest rate rises in almost as many months. As a first-time home buyer, the property market can be tricky to navigate at the best of times, let alone in a competitive market.

So, if you’re wondering how to buy a home in a competitive market, we’ve pulled together a few things to consider to help first-time home buyers.

1. Get your finances in order

The key to buying property in a competitive market is to make sure your finances are organised, and you have a deposit ready. While it helps to save up a 20% deposit, some lenders are willing to provide loans to borrowers with smaller deposits. That said, you’ll need to fork out for lender’s mortgage insurance (LMI) to protect the lender.

Read our blog on 8 steps to take when you start saving for a house for a few more first home buyer tips.

2. Understand your budget

Once you’ve got a grasp on your finances, you can turn your attention to your budget. This will determine how much you can afford to spend. Be sure to account for all the additional costs, including stamp duty, conveyancing fees and moving expenses, to name a few. You can use a borrowing power calculator to get a rough idea of how much you can afford to spend on a home.

While it’s important to understand your budget, make sure you stick to it or you could risk getting knocked back when it comes time to apply for finance.

3. Get pre-approval

As a first-time home buyer, you might want to consider getting pre-approval from your bank or lender. This will help to give you an even better idea of your budget and borrowing power. Not to mention, it demonstrates to real estate agents and sellers that you’ve done your homework and you’re a serious buyer.

4. Take advantage of government assistance

Buying a home as a first-timer is no easy task, especially when you throw in a hot property market. To help first-time home buyers purchase a home sooner, the government has introduced several grants, concessions and schemes. These government programs are designed to provide financial assistance and benefits to eligible first-home buyers. Check out what’s on offer in your state or territory.

Please note that Unloan does not participate in the Home Guarantee Scheme, Victorian Homebuyer Fund or other government home-buyer assistance schemes. If you are eligible for the First Home Buyer Grant, these funds cannot contribute to your 20% deposit. Please speak to your conveyancer on how best to approach this.

5. Research, research, research

Knowledge is power, especially when it comes to buying your first home. For many first-time buyers, the property buying process is a steep learning curve, so it’s essential to arm yourself with as much information as possible. From taking the time to understand the process of buying a home to learning about mortgages and researching the local property market, there’s plenty to learn when buying a home.

Research property values, trends and neighbourhoods to understand the local market. While it’s important to have a thorough understanding of your personal finances, be sure to stay up to date on market conditions and the economic environment to make informed decisions.

Visit as many open houses and inspections as possible to get a feel for what’s available and identify potential properties quickly. Plus, getting out and about will also help you narrow down what you’re looking for.

6. Be ready to act quickly

In a competitive market, properties move fast. With this in mind, it’s essential to be prepared to make swift decisions and submit offers promptly.

If you see a property you’re interested in, don’t wait for the inspection on the weekend. Instead, jump on the phone with the real estate agent to show that you’re a keen buyer. You might even be able to snag yourself an earlier inspection, which can give you an advantage over the competition.

When the market’s hot, people often make offers before the first inspection. In some instances, they may even make an offer without even viewing the property in person, especially if they’re located interstate or abroad.

If you’re interested in making an offer, don’t hesitate. Get in quick and put your best foot forward in a competitive market. While it’s important to ensure your offer is competitive, be sure to stick within your budget. It could even be worth including a personal letter to the seller to make your offer stand out from the competition.

7. Expand your search area

As you start to research and get a feel for the current property market, you might realise that you need to set your sights further afield. If you’re struggling to find a property within your budget in the areas you’re looking at, it could be worth looking in less popular but still desirable neighbourhoods. This may help to increase your chances of finding a property that meets your needs that’s still within your budget.

8. Be flexible with your settlement terms

Offering flexible settlement terms can make your offer more attractive to sellers. It can be worth taking the time to understand why they’re selling. If possible, try to accommodate their needs by tailoring your terms and conditions.

For example, if they’re selling their home to upgrade to a larger property, it could be helpful to have a 30-day settlement rather than a 60-day settlement if these terms also work for you. In some cases, the conditions of your offer could be the deciding factor between you and another buyer.

If you’re after more tips for first-home buyers, check out our collection of videos and articles on buying a home and home loans for beginners. Otherwise, if you’re on the hunt for a loan to help you secure a new property, calculate your affordability, get conditional approval and a competitive interest rate as part of an Unloan home loan.

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This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking independent taxation and financial advice before making any decision based on this information.

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval; satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000.

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

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* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.