You might be thinking about buying a home in 2023 but waiting for the prices to hit bottom or for bank interest rates to settle down. While waiting, here are some things you can do.

1. Work On Your Credit Score

Lenders use a credit score to check on the trustworthiness of borrowers. It reflects the likelihood that a person will repay their debt on time. Generally, a credit score of above 700 is considered above average. The higher the score, the greater the likelihood of you getting approved by lenders and the better the rates lenders will offer you. It is important to note that not all lenders use the same credit reporting agencies or credit scoring models. You can use our credit score calculator to identify potential issues in your credit file. Here are some tips for maintaining your credit score:

• Make your repayments on time: Even if it’s just one or two missed payments, it’ll be reflected in your credit report for two years.
• Don’t make regular credit enquiries, as this can reduce your score.
• Reduce your credit card limits: For every $10,000 of credit you have on a card, your borrowing capacity may be reduced by $40,000.
• Consolidate your debts: This can help simplify your monthly debt repayments and give you a lower overall interest rate on all your debt.
• Avoid using buy now, pay later services: Lenders regard these as debt obligations, so they can limit your borrowing power.

2. Work Out What You Can Afford To Borrow

Find out how much you can afford to pay on your mortgage before looking at houses. This avoids wasting time looking at a house you can’t afford. When determining how much you can afford, there are several factors to consider, including your income, expenses, savings, credit score, and the amount of deposit you can put down. Another factor to be wary of is that borrowing power is lower now than it was a year ago, for most people. Canstar reports that bargaining power has fallen by 24% since April 2022, blaming this on rising interest rates, which cause higher loan repayments. But there are things you can do to increase your borrowing power. Visit our page on 10 ways to increase your borrowing power in 2023 for ideas. And to determine how much you can afford, you can use our borrowing power calculator.

3. Research First-Home Buyer Grants And Schemes

There are various grants from the government for first-home buyers. There are grants ranging from $10,000 to $30,000, depending on where you buy. However, specific requirements must be met to be eligible, like staying within the property value limits and buying as an owner-occupier. You can use our FHOG calculator to find out how much in grants you can get. Some states provide stamp duty waivers for first-home buyers, and NSW gives the option of paying an annualised land tax instead of an upfront stamp duty, to help first-home buyers buy a property sooner. If you need more help with your deposit, there are shared-equity schemes that allow for deposits as low as 2%.

4. Save Up For A Deposit And Hidden Costs

You have probably already started saving for your deposit if you had made plans to buy in 2023. Apart from not having to pay the Lenders Mortgage Insurance (LMI), if you can put down a 20% deposit, more loan products and competitive interest rates will be offered to you, and your mortgage repayments may be more affordable. If you don’t have the 20% deposit, there is no need to worry. There are many lenders that provide home loans for more than 80% of the property value. Saving up the deposit can take a significant amount of time, so you may prefer not to wait that long. You can pay the LMI instead, or you may qualify for an LMI waiver from some lenders. Homebuyers should also be aware of costs associated with buying a house, like mortgage fees, stamp duty, agent fees, inspection fees and conveyancer fees. Make a separate budget for these expenses so that you do not end up emptying your savings account.

5. Explore Neighbourhoods You Want To Live In

You may have found your dream home, but what about the neighbourhood? Do your research and look for suburbs where you can afford to buy. Take the time to explore the different neighbourhoods that you are thinking of calling home, envision what living there would be like and narrow down your options. Some things to consider when looking at neighbourhoods are:

• Price of property should align with your budget.
• Low crime rates and safe environment.
• Proximity to transport, major roads and highways
• Easy access to amenities like grocery stores, restaurants, schools and recreational facilities.

6. Visit Open Houses

As of early 2023, there are fewer buyers in the market than sellers, so sellers are now more willing to negotiate with buyers. Schedule a day when you can visit houses. You can identify your priorities and preferences for your future home. It also provides an opportunity to ask questions. You can ask about the home’s features, age, conditions and other relevant details. You’ll also be able to explore different neighbourhoods. Overall, you’ll be able to make informed decisions and avoid surprises down the road.

7. Apply For Pre-Approval

When you’re ready, you may want to get a pre-approval. A pre-approval can help you streamline the home-buying process, save time by helping you focus on the property that you can afford, and give you an edge in negotiations. It’s always a good idea to speak to your mortgage broker to discuss your options and find the right pre-approval for your needs.

8. Shop Around For A Buyer’s Agent

While you can easily look for properties online, you may prefer hiring people to do more difficult aspects of the search. Good buyer’s agents will scour the market to find homes that meet your needs and budget. Their expertise will help shorten your search time and offer you more options than you would find by yourself, as they also have information about houses that are not publicly advertised. Take the time to look at reviews about agents and interview them before choosing one.

9. Do Not Skip Inspections

Hiring house inspectors can be pricey, but it would be a worthwhile expense. Inspecting houses can help in the following ways.

• Identifying potential problems: Issues such as structural problems, pest infestation and mould can be expensive to repair, so it is important to identify them early.
• Evaluate the condition of the property: Inspections help determine if any repairs or renovations are needed and give an idea of the costs involved.
• Negotiate on price: You can use additional costs required for repair and maintenance to bargain with the seller for a lower rate.
• Peace of mind: Getting an inspection assures you that you are making an informed decision.

We have a pre-settlement checklist to help you get acquainted with your new property.

10. Find A Good Mortgage Broker

Mortgage brokers can help you find the best home loan rate for your unique situation. They have to abide by the best-interest duty, so they are always obligated to prioritise their client’s interests when providing credit assistance. If you are worried about your credit standing, a broker can help you assess your position, provide you with all the options available, and give tips on how to make improvements on your application. They can prove to be a valuable ally in the unstable market, and best of all, they are not paid by you but by the lender.

Get Help From Experts!

We have great brokers who have worked with many first-home buyers. We have the expertise, experience and access to a large pool of lenders to help you find a mortgage to meet your needs and budget and a dedicated post-settlement team to help you with any issues that may arise. Call us on 1300 889 743 or fill in our free online assessment form, and we will contact you.