First Home Buyers
What is a First Home Buyer?
A first home buyer is a person seeking to purchase a house who has never previously owned residence. A first home buyer is expected to put a maximum of 5 percent down for the purchase for their first home, as stated by the National Association of Realtors Survey. First home buyers are restricted from claiming first-time homebuyer credit, although first-time homebuyer organizations offer tax benefits by providing mortgage credit certificates [MCC]
First Homeowner Grant [FHOG]
The First Homeowner Grant, otherwise known as FHOG, is an arrangement granted to those looking to purchase their first home. Benefits of the grant include being provided with $10,000, which is arranged by Revenue NSW. This money can be used for the buying your first with a value of up to $600,000 or building your own property with a value of up to $750,000. Luckily for first home buyers, you are not obligated to repay the grant. To be eligible for FHOG, you must be at least 18, and you are required to provide evidence such as documents to prove you are an Australian citizen. You are also allowed to use the FHOG as a portion of your deposit, but you must acquire several other savings, as the FHOG is insufficient in covering a deposit.
What to know as a First Home Buyer?
To be able to qualify as a first home buyer, the upmost basic information you must know is when purchasing your first home, make sure neither you nor anyone else you may be purchasing a home with has history of previously owning any property. Make sure you’re acquired with a stable deposit. It’s also extremely important to know the standards of your credit ratings. You will also need a home within the standards of your financial situation. You must also research the market before you purchase your first home, so you know what you’re situating yourself and possibly other co-buyers with.
The Process
ORGANISING A PRE-APPROVAL
A pre-approval is when you’ve been approved for the amount you’d like to borrow for your first purchase of your home by the lender you’ve chosen for assistance as a first home buyer, even if you haven’t found the property you’d like to purchase. You’re probably wondering why you’d need pre-approval as a first-time buyer. One of the biggest advantages of pre-approval is being provided with an amount of money for the property you’re looking to buy, and another exciting benefit is pre-approval is entirely free. In order to qualify for pre-approval, its advised that you get your lender to go over your credit history, and financial situation to decide if you are suited to make loan payments.
WHY DO YOU NEED A CONVEYANCER?
A conveyancer is a professional who helps to facilitate the transfer of property ownership. They will review the contract of sale and help to ensure that everything is in order before the purchase is finalised. conveyancers can also provide advice on any potential problems that may arise during the process. Loan Location has amazing conveyancers that we use day in and day out so we can recommend amazing people to help you buy your home.
PRIVATE SALE VS AUCTION
There are two different methods of purchasing property for the first time: private sales, and auctions. A private sale is consulting with a realestate agent or seller privately to organise and/or negotiate with until you both come to an agreement on terms in which you are both comfortable with. Auctions, however, are when several potential buyers are interested in purchasing the same home, so they hold an event to bid for possession on the property, and the property goes in the hands of the bidder with the highest offering of money. It’s highly recommended that you do not bid at auction unless you have a pre-approval in place.
Renting VS Buying
Renting
When renting, there’s a possibility that your landlord will increase your rent if there’s a rate increase environment or any other type of fluctuation. While their are rules and regulations on what your landlord can do, you are always at the mercy of the landlord. Of course, this does means that most of the maintenance is the responsibility of your landlord, and you will also be obligated to create a budget for maintenance and repairs if you do any damage to the property yourself. Your rent depends on the term of the lease, which is generally 12 months and it does give you the freedom to move around should your circumstances change and you need to move area. However, you are ultimately paying off the mortgage of your landlords investment and not your own home. You are also limited to customise the property to your standards if you are renting and not buying the property. If you do wish to customise the property, you will need to consult with your landlord to earn their approval.
Buying
On the other hand, there is no other feeling then owing you won home. Making the decisions on how you want the house to look or feel really is amazing. Of course, this comes with the full expense of owing your own home. While the landlord needs to give approval to make changes, they also pay the council rates and the water rates which can be expensive depending on the area you chose to live in. Yes, its expensive to own your own home however, as history as shown; the you will generally always sell your property for more then what you buy it for. The is the risk of rate changes should you you decide to go with a variable rate home loan however a fixed rate loan will allow you to control your home loan repayments just like rent. Equity from the property can be used to buy more property and allow you to become the landlord of your own while someone else pays off the mortgage.
Creating a Budget
KEEP TRACK AND CONTROL OF YOUR NET INCOME
What is Net Income? Net income is the income that you are left with after you subtract your deductions for taxes, superannuation and anything else you do like salary deductions or novated leases. Your final pay that lands in your bank account is what we call net income, and your take-home pay is what you’re advised to use when creating a budget. [if you have a hobby, you can make it possible to supplement your income and add to your net income and can come in handy if you lose your employment]
Track your Spending
There are so many ways to track your spending. You can usually use your own bank app to track your spending however, you can use 3rd party apps which is generally a better idea. You can of course use the trusted program like excel or google sheets to track your spending’s or budget monthly. It really helps when trying to save for a deposit.
Set your Goals and Make a Plan
It’s very important that you make a list in order to help you achieve your short-term and long-term goals. Short term goals should take you no longer than a year to complete. Long-term goals, however, will take years to complete. Your fixed expenses will give you an idea of how much money you’ll need for your budget, and variable expenses to guide you based on your previous spending habits.
Alter your Habits if Needed
If you have a good couple of months of data on your income and spending and you’re prepared go make adjustments on the unnecessary expenses, you will start to notice different patterns on spending and you will be able to see what you can do t0 cut back on in order to save more money. These expenses could be for example going to the movies, online shopping for clothes, eating out when you have food at home, etc.
The First Home Loan Deposit Scheme
The First Home Loan Deposit Scheme [FHLDS] is a government initiative to aid qualified first buyers, and single buyers or couples into successfully purchasing their first home. The FHLDS helps clients who have at least 5 percent of the value of a qualified property saved up as a deposit.
Since July 2022, the First Home Loan Deposit Scheme has been renames the The First Home Guarantee
The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Government initiative to support eligible first home buyers purchase a home sooner. It is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government.
Under the FHBG, part of an eligible first home buyer’s home loan from a Participating Lender is guaranteed by NHFIC. This enables an eligible home buyer to purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance.
Any Guarantee of a home loan is for up to a maximum amount of 15% of the value of the property (as assessed by the Participating lender). This Guarantee is not a cash payment or a deposit for a home loan.
From 1 July 2022 – 30 June 2023, 35,000 FHBG places are available to eligible first home buyers.
Stamp Duty
Stamp duty is a required tax that people need to pay if they buy a property like a home or a car.
The stamp duty rate depends on the purchase price of the property, and different rates apply in different states.
For example, in NSW the current stamp duty rates for properties valued up to $650,000 are:
– $0 for first home buyers
– $11,000 for non-first home buyers
If the property is valued at more than $650,000, the stamp duty rates are:
– $13,500 for first home buyers
– $21,000 for non-first home buyers
In Victoria, the current stamp duty rates for properties valued up to $600,000 are:
– $0 for first home buyers
– $7,320 for non-first home buyers
If the property is valued at more than $600,000, the stamp duty rates are:
– $11,980 for first home buyers
– $17,640 for non-first home buyers
As you can see, the amount of stamp duty you need to pay can vary depending on the state you live in and the purchase price of the property.
Stamp duty is just one of the costs associated with buying a property, so it’s important to factor this into your budget when you’re considering buying a home.
Calculate the stamp duty in your own state
GENERAL ADVICE WARNING
Any advice contained in this website is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice in regard to those matters.
