From time to time, I may publish blog posts giving a brief update of where I am up to on my home buyer journey. These posts aim to shed a personal light on what it is like to buy a first home in Australia which will supplement the information posts that describe how to save and buy a first home. In this blog post, I will talk about the numerous things I did during the Christmas/New Year holiday to prepare for buying my first home.
The First Home Buyer Guide
Over the second half of December 2023, I watched all the videos of the First Home Buyer Guide by Home Buyer Academy to get an overview of the process of buying my first home in Australia. I first heard about the course while listening to a Digital Finance Analytics video on buying a first home under rising interest rates. Since then, I had wanted to do the First Home Buyer Guide to learn more about the process of buying my first home. To prepare myself, I listened to a few First Home Buyer Guide podcasts and did two free coursesfrom Home Buyer Academy to get a feel of what the platform is like. Liking what I heard from the podcasts and the two free courses, I purchased the First Home Buyer Guide for AU$990.
Doing the course was worth it as it taught me an orderly process of buying the right property at the right price. The central idea of the First Home Buyer Guide is that there is a sequential process of purchasing the right property that suits my long-term needs without overpaying for it. This process is encapsulated by the PACE system which consists of ten steps over four phases:
- Preparation: It consists of assembling a support crew that would support me on my home buyer journey, knowing my borrowing capacity with the money that I saved and thinking about what I would like in my first home.
- Action: This consists of the property search and inspection, and using the information to revise my expectations of my first home.
- Commitment: Once I have found the property that I would like to buy, I would need to do some due diligence to see whether the property is right for me and if there are any faults or dealbreakers.
- Execution: Once the property is okay for me to buy, I would need to read and/or sign a contract, either negotiate a fair price or go to auction and undergo the settlement process once the property is purchased.
| Phase | Steps |
| Preparation | 1) Support Crew 2) Money 3) Plan |
| Action | 4) Search & Inspect 5) Revise & Correct |
| Commitment | 6) Methods of Sale 7) Evaluation |
| Execution | 8) Contracts 9) Negotiation & Auctions 10) Settlement |
The steps in the first two stages were very clear, highlighting the importance of research and self-reflection to understand the property market and what I need to consider when inspecting property. The course provided a lot of templates to keep track of who I have recruited in my support crew and to record whether I would buy recently sold properties so that I can calibrate my expectations of what I can buy.
What I learned from the course is that I don’t have to enter the property market right away by buying a cheap property that does not meet my long-term needs and does not have much market demand. Instead, if I have sufficient borrowing capacity and patience, I can stretch myself and buy a first home that might be expensive but would suit my needs in the long run and would be easier to sell as it would attract plenty of potential buyers.
On the other hand, the steps in the last two phases were a bit messy as I was confused of what I can do before and after I sign a contract depending on whether it is a private sale or an auction. This is something where I would need to do further research and ask more questions and guidance from my support crew. Nevertheless, the steps in the last two phases gave me an overview of how to use my research to negotiate effectively and what happens after I purchase the property so that I know when I can move into my first home.
I also received a lot of freebies in purchasing the course, namely a book on buying property at auction, a question board to ask questions to the course facilitators and a 30-day free trial of live Q&A sessions where I can receive guidance live. The 30-day free trial is something that I will activate later on once I have identified a few properties that I am thinking of buying, but I will make use of the book and the question board now while I start searching for property.
Overall, the course has been worthwhile in understanding what is involved when buying property. The steps taught in the course are not only useful for buying my first home, but also set the foundations for researching and buying investment property later on in my life.
What else did I do?
Going off the First Home Buyer Guide, I am starting to bring together my support crew that will support me in my home buying journey. I did some research on mortgage brokers, property solicitors, conveyancers and property inspectors that I could recruit as part of my support crew. At the moment, I am making appointments with two mortgage brokers to learn more about my borrowing capacity and ways to expand it. These mortgage brokers would not only search for the right home loan for me, but would also structure it in a way that gives me flexibility of buying investment property in the future. Knowing my borrowing capacity would allow me to decide whether to start looking at property or not.
In preparation for my meeting with mortgage brokers, I calculated how much money I earned and spent in 2023. I found that I had enough money to cover the weekly essentials and fun stuff, allowing me to save a huge proportion of money towards my first home. At the same time, I found that I could save even more money to increase my deposit and to cover the costs of buying my first home such as inspections and conveyancing fees.
As a result of inspecting my spending and saving habits, I have slightly modified my cash flows between my bank accounts so that I can save some money towards my first home while giving myself some money to spend on fun things and go on a domestic and Japan holiday over the next two years without feeling guilty. I will have plenty of excess savings, of which I will allocate a high proportion towards my first home, accelerating my savings.
Finally, even though I have not started looking at property, I am starting to walk around different suburbs in Melbourne. I am doing these tours to see what they are like, particularly how easy it is to walk to shops and the train station, and whether I would live in them. Over the past two weekends, I have done a tour of two adjacent suburbs within eastern Melbourne, looking at what homes, shops and public transport are like in these suburbs. I will do more suburb tours around Melbourne over the next few months to expose myself to different areas where I might live. This suburb research would put me in good stead in knowing what property I could buy when I start looking at property.
What’s next?
As for what’s next, I am still planning blog posts on ways to save money towards a first home deposit. Currently, I am planning to write a blog post on the First Home Super Saver (FHSS) Scheme, an initiative where one can save money towards a first home deposit via super. I have been using that scheme for the past 1.5 years, so I have some knowledge of how the scheme works and my experiences of using that scheme. I haven’t started writing it up yet, but I intend to recollect information on the FHSS and start planning that blog post so that I can write it up soon.