The Ultimate Guide to Organizing Your Finances Before Buying a Home

Buying a home is one of the biggest financial commitments you'll ever make, and being financially prepared can make the process smoother and less stressful. Beyond just saving for a deposit, lenders assess your overall financial health before approving a home loan. Here’s a step-by-step guide to getting your finances in order before making the big move.

1. Assess Your Current Financial Situation

Before you start browsing properties, take a good look at your current financial standing. Knowing exactly how much you can afford will save you from falling in love with a home that’s out of your budget.

Ask yourself:

• How much can I realistically save for a deposit?
• What’s my timeframe for buying a home?
• How much can I comfortably afford in monthly mortgage repayments?

To determine this, factor in:
✔ Your household income
✔ Weekly expenses
✔ Non-negotiable lifestyle costs
✔ Future expenses (e.g., school fees, travel plans)
✔ Monthly debt repayments
✔ Savings available for upfront costs (stamp duty, legal fees, etc.)

Understanding these numbers will help you set a clear and achievable home-buying budget.

2. Understand Your Borrowing Capacity

Once you have a clear budget in mind, the next step is determining how much you can borrow. Lenders evaluate your borrowing power based on:
✅ Your income
✅ Existing financial commitments
✅ Living expenses
✅ Savings history
✅ Credit score
✅ Property value
✅ Loan term

Since a home loan is a long-term commitment (often up to 30 years), consider future changes such as career shifts, family expansion, or moving overseas. A borrowing limit calculator can provide an estimate of how much you may be eligible for, but consulting a mortgage broker can give you a more tailored understanding.

3. Prepare for Additional Buying Costs

Many first-home buyers focus solely on the deposit, but there are other upfront costs to consider, including:

💰 Stamp Duty – A government tax on property purchases that varies by state and property type.
💰 Mortgage Registration Fees – Charged by state governments to register your mortgage.
💰 Transfer Fees – The cost of transferring ownership from the seller to you.
💰 Conveyancing & Legal Fees – A solicitor or conveyancer helps manage the legal process of transferring ownership.
💰 Building & Pest Inspections – Essential for ensuring the property is structurally sound.
💰 Buyer's Agent Fees (if applicable) – If you engage a buyer’s agent, their fee should be factored into your costs.

Being aware of these additional expenses helps prevent any financial surprises down the track.

4. Fine-Tune Your Home Loan Repayment Plan

Understanding your potential home loan repayments is key to long-term financial security. Before locking in a loan, consider:
📌 How much money do you want left over after your mortgage for savings, travel, and lifestyle expenses?
📌 Are you prepared for possible interest rate increases?
📌 Would you prefer a loan with features like extra repayment options or offset accounts?

Using a Home Loan Repayment Calculator can give you an estimate of your repayment commitments, helping you decide on a loan that aligns with your financial goals.

5. Strengthen Your Deposit and Financial Profile

Your deposit is one of the biggest hurdles to homeownership. While a 20% deposit is ideal, some lenders allow smaller deposits, though this may require Lenders Mortgage Insurance (LMI).

To boost your deposit savings and strengthen your loan application:
✔ Consolidate all your savings into one account for better tracking.
✔ Minimize unnecessary expenses to save more efficiently.
✔ Reduce existing debts, including credit cards and personal loans.
✔ Avoid applying for new credit before seeking pre-approval.
✔ Keep your financial records organized – lenders often require bank statements from the last three months.

Having a strong savings history and low debt levels makes you a more attractive borrower, increasing your chances of securing a competitive home loan.

Final Thoughts

Buying a home isn’t just about saving a deposit—it’s about ensuring your overall financial health is in check. By understanding your expenses, borrowing capacity, and additional costs, you’ll be better prepared for the journey ahead. Whether you’re a first-time buyer or a seasoned investor, taking these steps will set you up for a smooth home-buying experience.

This article was adapted from insights shared on domain.com.au and Suncorp Bank.

** The information provided in this blog is for general informational purposes only and does not constitute professional advice. While we strive to ensure accuracy, we encourage readers to conduct their own research and due diligence before making any decisions based on the content or sources mentioned. Porter Matthews Metro does not assume any liability for errors, omissions, or reliance on the information provided. **