First home buyer
  • Everything you need to know when you buy your first home ...
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Buying your First Home! ...

 

Overview
First home owners grant
Stamp duty concessions
Your deposit
Maximum loan amount / property price

 

Overview  

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 ...

Our service at Home Loan Advice Centre costs you nothing and we provide top quality professional assistance the whole way through the entire buying process.

We'll explain to you how government grants and stamp duty exemptions can save you up to $40,000.00 off the cost of your new property in some states. So clearly these benefits are worthwhile if you're eligible!. As a first home buyer, items you should consider include:

1. The First Home Owners Grant

  • Base amount = $7,000 provided by the federal government but various states impose a cap on cost price above which the federal first home buyer grant is not payable. For example, in NSW, first home buyers purchasing a first home above $835,000 cost price in 2011 will not receive the first home buyer grant.

  • Additional amounts - some states have additional state based first home buyer bonuses (usually as a compensation for charging first home buyers a stamp duty on purchase) ie ...
    • Vic - $13,000 extra for brand new unlived in properties. If the brand new property is in a rural area (outside metropolitan areas), you receive an additional $6,500 (until 30 Jun 2011)

2. Stamp Duty Exemption schemes – various schemes provided by the state governments

3. Deposits required – the amount of deposit you need to provide

4. Loan capacity – your capacity to borrow money from the various lenders as determined mainly by your income

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 form. 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.

 

 

First home owners grant

To be eligible for the federal government’s First Home Owners Grant scheme 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.

The grant amount varies from state to state. In NSW, VIC, QLD, and the ACT it is currently $7,000. In VIC, first home buyers buying brand new properties (new build or full renovations) receive an additional benefit stamp duty exemptions are not as favourable as in other states.

The government gives you the First Home Owners Grant in the form of cash to add to your deposit and this is usually paid at the time of property settlement. The property you buy must be an owner occupied property and legislation introduced in 2004 requires you live in the property for a period of at least 6 consecutive months commencing within the first 12 months after purchase. 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. 

The First Home Owners Grant application can be submitted up to 12 months after the property purchase has settled however Home Loan Advice Centre usually recommends you request that your chosen lender arrange this up front for ease and simplicity. This is done at the lender’s discretion.

A current First Home Owners Grant application form needs to be completed to apply.

 

Stamp duty concessions

In NSW first home buyers are eligible for the First Home Plus stamp duty exemption scheme which gives first home buyers discounts on stamp duty payable dependant on the cost price of the purchased property. Similar to the First Home Owners Grant, 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. There are equivalent schemes in other states however the exemptions receivable vary greatly. More information is available in our First Home Buyer e-Course (see above in blue) or by clicking our stamp duty page.

From 1st Jan 2012, 100% stamp duty exemptions are only granted on purchases of new unlived-in properties (ie off-the-plan or new developments or substancially renovated properties)

Some states give a 100% stamp duty exemption for all property purchases up to a cost price of $500,000. A $500,000 first home purchase in QLD & WA for example will have no stamp duty payable (on the transfer of title nor on the mortgage). Above a $500,000 cost price, purchasers are on a sliding scale of increasing stamp duty up to a point where 100% stamp duty is again payable.

Please call Home Loan Advice Centre on 02-9210-1000 for more information on exact stamp duty amounts payable against different home purchase prices.

 

Your deposit

If you're a first home buyer, you will need to provide some amount of deposit towards the purchase of your first home. The amount of deposit you require is dependant on a number of factors including

  • Property cost - the cost price of the property and the corresponding loan amount you arrange against your property

  • Purchase costs - the cost of stamp duties and other purchase costs (eg loan application fee, mortgage registration fees, legal costs, mortgage insurance premium)

  • Other factors - whether any other security property can be pledged by family towards your purchase.

The loan amount depends on the policy of the various lenders however in general the maximum loan against your new purchase is 95% of the value of your property.

As an example, the approximate deposit amounts required for first home purchases in Nsw, Qld, and Wa could be as follows ...,

  • Deposit amount - ranges from about $7,500 for a $250,000 property purchase to about $20,000 for a $500,000 property purchase (assuming that you qualify for the first home owners grant)

  • Genuine savings - also note that various lenders may also have rules requiring you show a "capacity to save" up to 3% or 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. For example, in NSW eventhough a first home buyer may only need to contribute $7,500 cash as deposit to buy a $250,000 property, a bank may require that the borrower show they've genuinely saved this amount over a 3 month period and evidenced via their bank record history. In other words, receiving the full deposit as a gift of $7,500 from parents may not satisfy banks geniune savings requirements in some situations.
  • Sample loan report - click to see a NSW "new unlived-in property" sample loan report indicating deposit required and various purchase costs you may expect on a $500,000 new purchase - note the items marked in yellow.

 

Maximum loan amount / property price

The amount that you can borrow and hence the maximum property you can purchase is usually based on two factors,

  • Your deposit amount and

  • The amount of income you earn

These factors determine your lending ceiling and usually the amount you can borrow is dependant on which ceiling you hit first.

 

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:

 

Application process

How much can I borrow

Purchase Index

Repayment calculator

 

 

Remember.... If you'd like us to help you work out your loan options - it's just 5 minutes away by filling out our short online enquiry form.