Buying your First Home.
Buying your first home should be an exciting and satisfying experience and with a little knowledge and preparation there is no reason why it shouldn't be. There are a number of things to be aware of ranging from the various government benefits for first home buyers to understanding the requirements the various lenders place on you before they will give you a loan. Don’t be worried about the number of things to consider … that's where we come in. The service at Home Loan Advice Centre costs you nothing and we provide top quality professional assistance the whole way through the entire buying process.
Government grants and stamp duty exemptions can save you up to nearly $40,000.00 off the cost of your new property in some states. So clearly these benefits are worthwhile if you're eligible!.
First home buyers get 2 main benefits. First is a cash grant handed to you (called the first home owner's grant) and second is an exemption of stamp duty costs associated with the purchase of a property. The following items are factors that first home buyers should consider
1. The First Home Owners Grant
Each state has different qualification rules and pay different grant amounts. The grant can be up to $15,000. (or even up to $25,000 in Northern Territory!). For example, in NSW, first home buyers purchasing a brand new first home will receive $15,000 first home owners grant up to a cost price of $750,000. Most states now require the property you purchase to be "brand new" to qualify for the first home owners grant. See first home grant and stamp duties page for more information.
Eligibility - to be eligible for the First Home Owners Grant you must be an Australian citizen or permanent resident and you (and your spouse / partner) must have not previously owned a "home" in Australia. If there are 2 applicants, at least one applicant needs to be an Australian citizen or permanent resident to qualify.
Most (but not all states) require the property to be a "brand new unlived-in property".
Generally you are required to live in the property for a period of at least 6 consecutive months commencing within the first 12 months after purchase. (rules differ by state) Therefore, there is some flexibility in complying with this legislation and you still may qualify if you decide not to live in the property straight away or alternatively live in it for six or more months and then rent it out following that.
2. Stamp Duty Exemption schemes – whenever a property transaction occurs, the state governments usually charge a stamp duty cost as a percentage of the cost price (it's somewhere around the 4% mark in most states). If you meet the state rules as a first home buyer, most states will offer you a substantial reduction in the stamp duty amount payable. The discount given is dependent on the cost price of the property and other factors. For qualifying first home buyers in NSW for example, no stamp duty is payable for first home purchases up to $550,000. Some states don't offer any discount if the property being purchased is not "brand new" but other states are less stringent and also offer discounts on "established" property purchases. See first home grant and stamp duties page for more information
Eligible applicants must be an Australian citizen or permanent resident and you
(and your spouse / partner) must have not previously owned a home in Australia.
Once the property cost exceeds a certain price (somewhere between $500,000 - $550,000. less for vacant land), the exemptions offered by the state governments start to drop.
These rules and exemptions change frequently so please call Home Loan Advice Centre on 02-9210-1000 for more information on exact stamp duty amounts payable against different home purchase prices.
3. Deposits required – the amount of deposit you need to provide. Generally the maximum loan possible to assist with your purchase is limited to 95% of the value of the property (note lenders will charge a mortgage insurance premium at this level which usually is capitalised onto the loan so some borrowers can end up with a loan at a level up to about 97%-98% of the cost price). Therefore the amount of deposit you need to provide is mainly dependent on the loan %, whether or not you get any first home buyers grant, and whether or not you have any stamp duty cost. It differs in each different buyer's circumstance, each different cost price, whether you puchase a brand new or established property, and which state you purchase in. Working all this out is one of our main roles so please see our online enquiry page if you'd like us to work this out for you.
As an example, the approximate deposit amounts required for $500,000 first home purchase might be as low as $13,000 in some states. See sample loan report
Also note that various lenders may also have rules requiring you show a "capacity to save" up to 5% of the cost price via a 3 month savings record. This is called "genuine savings and the requirement is on a case-by-case basis and also dependent on your final required loan to value ratio. There are various ways to either comply or avoid needing to comply and our knowledge and experience on how to acheive this is part of benefit of using Home Loan Advice Centre to help with your loan.
4. Loan capacity – your capacity to borrow money from the various lenders as determined mainly by your income and your personal situation ie married vs single, children vs no children, debt levels, etc.
5. Your repayments – what your loan repayments will be at various loan amounts.
Home Loan Advice Centre's loan service is provided to you completely free of charge. We can do this because our lenders (30 of Australia's main lending institutions) pay us commissions based on the wholesale volume of loans our group refers to them. We can therefore, offer you our experience and expertise, and guide you through the entire home buying journey, without charging you a cent. You end up with exactly the same loan if you'd organised it through a bank yourself, but we do all the leg work and negotiations with the banks for you. a great result!
So if you are looking to buy a home or investment property visit our 5 minute online enquiry page . We'll assess your loan options and send you a full report of your capacity. Also we'll include parts 1 and 2 of our eCourse. an indepth guide to buying property in Australia. Click to see a sample .
For more information on this topic or any other topics please call Home Loan Advice Centre on 1300-729-177 or 02-9210-1000. Or see the following links