Avoid these 5 mistakes when entering the property market

As a landscaper, you've spent years creating beautiful outdoor spaces for others. Now it's time to create something for yourself – your first home. Entering the property market can feel overwhelming, but understanding common pitfalls can help you make informed decisions and secure the right home loan for your situation.

The Australian property market presents unique opportunities for tradies like landscapers, with specialised home loans for landscapers and government schemes designed to help first-time buyers. However, many first home buyers make avoidable mistakes that can cost them thousands of dollars or delay their home ownership dreams.

Understanding Your Financial Situation

Before you start looking at properties, you need a clear picture of your financial situation. Many landscapers have irregular income patterns, especially those who are self-employed or work seasonally. This doesn't mean you can't access home loan options from banks and lenders across Australia – it just means you need to present your finances correctly.

Your borrowing capacity depends on several factors:

• Your average annual income over the past two years
• Regular expenses and living costs
• Existing debts and credit commitments
• The deposit you've saved
• Your credit score and history

Lenders will typically ask for bank statements covering the past three to six months, along with tax returns and business activity statements if you're self-employed. Having these documents organised before you apply for a home loan can streamline the application process.

The Loan to Value Ratio (LVR) Mistake

One of the biggest mistakes first home buyers make is not understanding the loan to value ratio and its impact on their loan amount. The LVR represents how much you're borrowing compared to the property's value. For example, if you're buying a $500,000 home with a $50,000 deposit, your LVR is 90%.

When your LVR exceeds 80%, you'll typically need to pay lenders mortgage insurance (LMI). This protects the lender if you can't make your repayments, but it adds thousands to your upfront costs. However, there are ways around this:

• The Home Guarantee Scheme allows eligible first home buyers to purchase with as little as a 5% deposit without paying LMI
• Some lenders offer LMI waivers for certain professions
• Family guarantee options can help reduce your LVR

Interest Rate Considerations

Choosing between variable interest rate and fixed interest rate options is crucial for your long-term financial health. Variable rates can fluctuate with market conditions, potentially saving you money when rates fall but increasing your repayments when they rise. Fixed rates provide certainty but may cost more if rates drop.

Many first home buyers focus solely on the interest rate, but this overlooks other important factors:

• Interest rate discounts that may only apply for a limited time
• Ongoing fees and charges
• Features like offset accounts that can reduce interest costs
• The ability to make extra repayments

An offset account can be particularly valuable for landscapers who experience seasonal income fluctuations. During busy periods, you can park extra earnings in the offset account, reducing interest charges. When work slows down, you still have access to these funds if needed.

Government Support and First Time Home Buyer Schemes

Australia offers several first time home buyer programs designed to help you enter the property market sooner. These include:

• First home owner grants (FHOG): Cash grants for eligible first home buyers, with amounts varying by state
• Stamp duty concessions: Reduced or waived stamp duty for first home buyers in most states
• First Home Loan Deposit Scheme: Part of the broader Home Guarantee Scheme
• Regional First Home Buyer Benefit: Additional support for properties in regional areas

These benefits can save you tens of thousands of dollars, but eligibility criteria and property price caps apply. Some schemes also have income limits, so understanding which programs you qualify for is essential when buying your first home.

Getting Pre-Approved: Your Property Market Advantage

Many first home buyers start looking at properties before securing finance. This approach can lead to disappointment and missed opportunities. When you get pre-approved for a home loan, you'll know exactly how much you can borrow and demonstrate to vendors that you're a serious buyer.

The pre-approval process involves a lender assessing your financial situation and confirming how much they're willing to lend. This gives you confidence when making offers and can be the difference between securing your dream home or missing out to other buyers.

Access to banks and lenders nationwide means you're not limited to your local branch. Different lenders have varying criteria and may offer different packages suited to your profession as a landscaper. Some may provide more favourable terms for tradies or offer specific benefits that align with your income patterns.

Planning for Your First Investment Property

While your immediate focus might be on buying your first home, it's worth considering your longer-term property goals. Many successful landscapers eventually move into property investment, using their trade skills to add value through improvements and maintenance.

Investment loan options differ from owner-occupier loans, typically requiring larger deposits and carrying slightly higher interest rates. However, they also offer tax benefits that can improve your overall financial position. If you're thinking about buying your first investment property in the future, discussing this with your mortgage broker now can help structure your initial loan appropriately.

Entering the property market as a first home buyer doesn't have to be daunting. With the right preparation, understanding of available schemes, and professional guidance, you can secure a suitable home loan and start building your property portfolio. Remember that your irregular income as a landscaper isn't necessarily a barrier – it just requires the right lender and loan structure.

Call one of our team or book an appointment at a time that works for you to discuss your first home buying journey and explore the loan options available to help make your property ownership dreams a reality.