Last Updated: 23rd May, 2024

Signs That You’re Ready To Stop Renting And Buy Your First Home

Published by Otto Dargan on April 17, 2023
Are you tired of renting and wondering if you’re ready to buy your first home? If you’ve been thinking about it, it’s important to make sure you’re truly prepared before taking the plunge. Here are some signs that it’s time to move away from renting and begin searching for your first home:

1. You Have A Stable Income

Being able to pay your mortgage every month is essential to owning a home. If you have a history of paying rent on time without missing any payments, it can be a good indication that you’ll be able to make mortgage repayments on time. A stable income and job security are important for loan approval and can provide the confidence you need to take on a mortgage.

2. You’ve Saved Up For A Deposit

A deposit is one of the biggest hurdles to homeownership, but if you’ve saved up enough money for a substantial one, you’re on the right track. Typically, a 20% deposit is required to avoid Lenders Mortgage Insurance. If you don’t have enough savings, you may still be eligible for a low-deposit home loan, provided you meet the lender’s requirements for income and credit history. To get an estimate of your borrowing capacity and home loan repayments based on any loan amount, try using Home Loan Experts’ ‘How Much Can I Borrow’ calculator.

3. You’re Ready To Settle Down

Renting is a great option if you’re moving around a lot or if you’re not sure where you want to live long term; however, if you’re ready to settle down and stay in one place, buying a home can give you a sense of stability and security.

4. You Can Bear The Additional Costs

Owning a home comes with additional costs that renters don’t have to worry about, such as property taxes, homeowner’s insurance and maintenance. If you’re aware of these costs and have factored them into your budget, you’re probably ready to take on the financial responsibility of homeownership.

Opportunities For First-Home Buyers

Property Prices Have Started To Recover

The RBA paused its cash rate hikes in April, providing relief for borrowers and potentially boosting buyer confidence in the housing market. The national Home Value Index (HVI) increased 0.6% in March, the first monthly rise since April 2022, and this trend is expected to continue. Experts predict that greater certainty around the end of the current cycle of rate hikes will improve consumer sentiment, which is already reflected in the 9.4% increase in the Consumer Sentiment Index reported by the Westpac Melbourne Institute in April, compared with March.

Best Time To Enter The Property Market

There are advantages for first-home buyers who enter the property market now. With interest rates stabilising, and the likelihood of home values rising further in the future, buyers can benefit.
Cash Rate Is Closer To Its Peak
The recent actions and statements from the RBA about holding the cash rate suggest that it has either peaked or is approaching its peak. For renters who are considering entering the property market, this could be positive news, as it means they may not have to face rising interest rates, and the cost of borrowing may not increase further.
Home Prices Are Likely To Be At Or Near The Bottom
Over the past year, there has been a significant decline in the property market, leading to a fall in home prices, but the increased HVI in March suggests home prices are either nearing their bottom or have already reached it. This is a positive sign for renters who are considering buying a property, as they have the opportunity to purchase a home at a lower price point while also potentially profiting from future price increases. Additionally, there are government schemes and grants available to first-home buyers that can help make homeownership more affordable. But remember, it’s important to consider your personal financial situation, eligibility for loans, and long-term goals before making any decisions.

Accelerating Rents And The Massive Rental Shortage In Australia

Australia’s rental market is facing challenges. Rents have increased in most areas and vacancy rates recently hit a record low. Data from CoreLogic shows the National Rental Index rose 2.5% during the March quarter, compared with 2.0% during the December quarter. The median rent nationwide is now $570 – a 10.1% rise in the 12 months to March, making affordable rents increasingly difficult to find, particularly with the influx of migrants from overseas. Meanwhile, the national vacancy rate tightened from 1.6% to 1.1% in the 12 months to March. Limited supply is driving up rental values and giving property owners more negotiating power with tenants. All of this means the cost of renting is making buying more attractive.

Rents Vs Mortgage Repayments In Each State

The table below shows the median weekly rent of all residential properties throughout Australia, along with the percentage increase over the 12 months to March.
Change In Median Rent (All Dwellings)
Region Median weekly rent (approximate monthly equivalent) Increase In 12 Months
Sydney $699 ($3029) 12.6%
Melbourne $526 ($2280) 10.8%
Brisbane $599 ($2596) 12.3%
Adelaide $531 ($2301) 11.5%
Perth $573 ($2483) 12.8%
Hobart $563 ($2440) 4.7%
Darwin $588 ($2548) 4.6%
Canberra $674 ($2921) 0.3%
Combined capitals $594 ($2574) 11.5%
Combined regionals $507 ($2197) 6.6%
National $570 ($2470) 10.1%
Source: CoreLogic Quarterly Rental Review 2023 (March quarter) The table below shows the monthly mortgage repayments for different loan sizes based on the lowest variable rate our panel of lenders can offer over a 30-year term, as of April 2023. These example loan repayments were determined using our repayment calculator.
Loan Amount Change In Median Rent (All Dwellings)
$500,000 $2,651
$600,000 $3,181
$700,000 $3,711
$800,000 $4,241
$900,000 $4,771
$1 million $5,301
Note: The 4.89% rate is based on the lowest available from our panel of lenders as of 11 April 2023. Rates are subject to change from this date. Keep in mind that mortgage repayments are monthly, whereas median rents are weekly. Use this data to estimate your ability to afford monthly mortgage repayments. Additionally, our Rent Vs. Buy Calculator allows you to input information about the property you want to purchase and your financial situation to compare the cost of renting versus buying a home.

How Home Loan Experts Can Help You Buy Your Dream Home

At Home Loan Experts, our experienced brokers:

  • Provide information on various loan options that may be suitable for the borrower’s financial situation.
  • Offer pre-approvals to help borrowers understand their borrowing power and budget accordingly.
  • Help borrowers understand the costs involved in buying a property and provide information on grants or schemes that may be available to help with these costs.
  • Negotiate with lenders to get the best interest rates and loan terms for the borrower.
  • Help borrowers understand the benefits of owning a property, compared with renting.
  • Provide tools and resources such as mortgage calculators to help borrowers understand the financial implications of buying property compared with renting.
  • Assist borrowers with improving their credit score and financial position to increase their chances of loan approval and better loan terms.

Ready To Say Goodbye To Renting and Hello To Your Dream Home?

Don’t let the opportunity to own your dream home slip away. Let our expert mortgage brokers at Home Loan Experts assist you in transitioning from renting to owning. Call us today at 1300 889 743 or fill out our free online assessment form to take the first step towards owning your own home.

labelCategory: First Home Buyers