First Home Buyer Guide: Here’s What You Need to Know

January 18, 2021 By: Nfinity Financials0 comments

A home is not just a big financial commitment but also an emotional one for anyone, not only the first home buyer. For the first home buyer, the home will be the most significant financial commitment they will make. As a first home buyer, buying a home can seem daunting; however, with some research and planning you can make it a pleasant experience and an achievement to cherish.

Finding a home

One is likely to stay in a home for long term even to the extent of bequeathing the same to future generations. This means while choosing your home, you may want to do thorough homework by researching property prices and potential capital returns in the future. It would also be worthwhile to find out about existing and planned infrastructures in the vicinity of your new home such as roads, schools, hospitals, supermarkets and public transport systems.

Assess your financial situation as a first home buyer

While you are looking for your dream home as a first home buyer; it would be prudent to look at your assets, liabilities, monthly commitments and income to arrive at a loan amount you can afford. You may want to analyse these numbers not just as they stand today but also account for future growth as well as unplanned decrease in case of circumstances out of your own control.

Your bank can arrange for a pre-approved loan for you. This will help you close the deal quickly and easily as soon as you find the property you like. We at Nfinity Financials can help in assessing your financial situation and help you get a pre-approved loan.

Saved for the deposit?

When you are planning to buy your first home, your priority should be to have enough funds to not just pay for the upfront payments but also to support a deposit. The minimum size of the deposit for a loan approval is typically 2%-5% of the property value for new properties also known as the loan to value ratio (LVR). However, if you are in a position to arrange for about 20% of the property value as a deposit, you may save on the need of buying additional lenders’ mortgage insurance (LMI).

First Home Owner Grant (FHOG) for first home buyer

The First Home Owner Grant is a A$25,000 tax-free grant given to first home buyers to either build a new home. The condition for this grant is that the building contract needs to be signed between June 4th, 2020 and December 31st, 2020. Hence the first home buyers can take advantage of this grant especially in cases where certain banks are accepting the grant in lieu of the deposit and are issuing pre-approvals based on the same.

First Home Loan Deposit Scheme (FHLDS) for first home buyer

The First Home Loan Deposit Scheme is a federal government scheme that allows first home buyers to get government guarantee instead of the deposit in order to secure a home loan. If you secure this guarantee, you can avoid the aforesaid deposit as well as paying for the LMI. Given the limited number of people who may be eligible, one will need to get their tax returns and Notice of Assessment from the Australian Taxation Office (ATO) obtained to stand a chance.

First Home Buyers Grant – New South Wales (NSW)

First home buyers in NSW are eligible for a further A$10,000 grant for a new property along with zero first home buyer stamp duty (for properties valued up to A$650,000) or partial concession in stamp duty (for properties valued between A$650,000-$8000,000) as is the case. There is further provision of Zero First home buyer stamp duty (for land valued up to A$350000) and concessional stamp duty (for land valued $350,000 to $450,000).

Leveraging multiple Govt grants and schemes

As a smart first home buyer, you must consider leveraging various federal government schemes and grants based on the eligibility criteria and timelines of each and therefore saving the stamp duty and other incidentals in the bargain. To align all these grants and schemes to attain maximum benefit you may speak to our mortgage brokers who would be happy to help.