Top tips for deciding whether to buy your first home

As potential buyers weigh up their decision against property prices and interest rates rises, ACM sat down with CANSTAR's editor Effie Zahos.

The top two things to consider were security and serviceability - can you afford it?

In a rental crisis, Ms Zahos said some might be better off paying a mortgage than rent.

You'll also need a 20 per cent deposit to avoid lenders mortgage insurance. Of course, the bigger the deposit, the less you're borrowing, she said.

Ms Zahos said multiple home buyers bought with minimal deposits in the past couple of years and became 'mortgage prisoners'.

Mortgage prisoners are people unable to renegotiate their mortgages or unable to refinance their home loans.

If you don't have a 20 per cent deposit as a first home buyer, check if you are eligible for the government's Home Guarantee Scheme, she said.

Financial security was important to ensure you could make your mortgage repayments but waiting for a guarantee could become a long wait. Ms Zahos acknowledged contract and freelance work were a feature of the modern job market.

"You do have to actually get it across the line with the bank so they will be looking to see how long you've been in the job and the industry that you are in," she said.

Ms Zahos says to avoid 'investment paralysis' you needed to create an exit strategy.

"What if I did lose my job? What can I do?" she said.

"Well, what can you do? Would you invest, put that as an investment property and move out?

"Would you rent out a room? What are some exit strategies you could have because that could help then your decision making process as well and understand that there are options," she said.

"If property prices go up five per cent, how much more behind am I in a deposit, am I chasing my tail? If property prices do fall five per cent am I better off waiting?"

Ms Zahos didn't believe it was wise for first-home buyers to be playing for time in the market.

"It's the case of doing your sums, what's your target, where you want to go, how much do you have to save. When will you get it and jump in," Ms Zahos said.

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"Maybe the property prices have reached their peak so if that's the case...you may want to jump in before they do a complete turnaround, but we've also still got rates, we could have another rate hike [while] some banks are forecasting we've reached our peak."

As for the federal budget, Ms Zahos said there was not much to provide relief for affordability.

"It's just the old demand versus supply, you're getting population growth and if you're not releasing more property or land, what's that going to do? It's going to increase prices."

"It's important that you do your due diligence and buy well."

Have you got a deposit? If you don't have a deposit, set a goal.

What is the deposit I need to be buying? Do some research on the areas you are looking to buy into and what amount was needed, she said.

Do you want to live in this house or rent it out?, Ms Zahos asked.

"If you already have a deposit of $50,000 or $60,000 then I'd start looking if I'm eligible for any first home owner grants. Can I get stamp duty concessions? How much borrowing power do I have?," she said.

To get advice on eligibility she recommended talking to a lender or mortgage broker.

Once you know your borrowing power you could target the suburbs you would like to buy in.