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All you need to know if you are a first home buyer in Australia

All you need to know if you are a first home buyer in Australia

There are a lot of grants and incentives being provided to the first home buyers in Australia. In this blog, we are going to discuss everything that you need to know about buying your first home in Australia.

Eligibility, average cost, and grants available for first home:

The age of the first home buyer in Australia is 29 years. And the average cost for the first home is about $300,000- $400,000. The First Home Owner Grant (FHOG) is a very essential scheme. If one is successful in getting this scheme, you can get your new home with a deposit as a low as 5%. Almost everyone who plans to buy a new home needs to apply for a loan. In the later section of the blog, we are going to talk about how you can get a loan for your first home?

Getting a loan for your first home:

  1. Try to choose your option carefully:
  • You should talk to your friends and experts to know more about getting better loans. At first, you need to analyze your financial situation and then try finding a loan that suits your requirements. Taking a loan is not a one-time process. You have to repay the loan amount over a fixed period of time. That is why you have to consider all the factors carefully before opting for any loan. Start saving money so that you can pay at least 20% of the total amount of the home.
  1. Gather information about different types of properties:
  • There are different types of properties available to you. Based on your requirements, you will opt for a house or an apartment. Before you apply for a loan, make sure you know all the pros and cons of the property type available before you.
  1. Find a proper loan for your home:
  • Now that you are aware of the type of home you want to buy. Contact some broker or property dealer before making your final decision. Check for some schemes and other grants that would give you a more precise idea about how much money you need.
  1. Get pre-approved finance for your home:
  • This is a very important thing in the process of buying a new home. Pre-approved finance for your home will tell you exactly how much money you can borrow. And this amount depends a lot on your financial situation. You can talk to real estate agents and other property dealers for more information in this regard.
  1. Apply for your full loan approval:
  • After you have got a clear idea about how expenses, you have to apply for the full loan approval. There are several auctions involved and you have to be the best bidder. Now, a sales agent may help you a lot in getting this deal done over time. Make sure that your deal meets all your obligations.
  • Now, the lender will verify all your applications and other eligibility for this loan.
  1. Now comes the settlement:
  • This is the final stage of completing your deal. The settlement is a process of transferring the property from one hand to the other via a legal process. Now the seller will give you the keys to your home or apartment. But you have to apply for the grants or incentives before initializing your settlement deals.
  • At first, you will get the contract documents from your lender then you have to reply to him with your building insurance papers and then at last your settlement will be booked.

The HomeBuilder Grant:

Now that you are aware of the process to get a new home with the help of a loan. It is time that you know about the grants that are available in different stated of Australia. The HomeBuilder grant is available for either building a home or buying a new home.

Eligibility:

To become eligible for this scheme, you should meet the following criteria:

  • You should be an Australian citizen and 18 years old or more.
  • You should be an individual, not a trust or any other organization.

Documents required:

The table given below contains the details of the documents that you have to submit.

Dwelling categoryCriteria for eligibilityRequired documentation
All·       Should be an Australian citizen

·       An individual

·       18 years old or more than that

·       Licensed builder or registered before 4 June 2020

·       Copy of your current passport, Australian Birth certificate, and citizenship certificate of Australia.

·       Photo identification form of yours (like driving license)

·       If your name on any document differs from some other, you need to present proof that you have changed the name.

·       Copy of the license of the builder. The registration should have been done before 4 June 2020.

AllEligibility for the income caps:

·       Not more than $125,000 for an individual

·       Below $200,000 for a couple

 

·       Evidence from the income tax department that shows your income
New Build·       The value of your property should not be more than $750,000.·       Copy of a certificate that shows the property is registered in the name of the applicant.

·       Copy of home building contract but the contract should have signed between 4 June 2020 – 31 December 2020.

·       Copy of a document showing the value of your land. (it could be a copy of front and execution pages of the contract for the sale of land or a copy of your latest rate notice).

·       Proof showing your construction commencement along with the evidence showing that the foundations have been laid and you have paid the required amount of money to the contractor.

·       Proof showing that the property for which you have applied is your principal place of residence.

Renovation·       The contract value of the building should lie between $150,000 – $750,000.

·       The property value should be less than $1.5 million.

·       Copy of the certificate showing you are the owner of the property.

·       Copy of the contract of building showing the renovations and this contract should have been signed between 4 June 2020 to 31 December 2020.

·       Copy of a document showing the construction commencement (invoice issued for the renovation works)

·       Copy of latest rate notice to show the value of that property

Off-the-plan·       The value of the property should be less than $750,000·       Proof showing the commencement of construction

·       Evidence to prove that this place will be your principal residence

·       Copy of the front and execution pages of the sales contract. The contract should have signed between 4 June 2020 – 31 June 2020.

·       Copy of a certificate showing that you are the owner of the property.

Conclusion:

This blog has told you all about how to get a loan and all the processes involved in buying your first home experiences.

10,000 more places now available for the first home buyers under the First Home Loan Deposit Scheme

The first step under this scheme was taken on January 1, 2020, when the Federal government provided enough space for 10,000 homes. Now 10,000 more spots have been made available for the first home buyers in the fiscal year 2020-21. Under this scheme, the buyers will get the benefit of getting the home on minimum deposits.

This scheme is called the First Home Buyer Deposit Scheme. Under it the first-time buyers can get a new home by paying only 5% of the total amount. And the government of Australia has become a guarantor for the other 15%  of the total money. But one thing that you should keep in mind is that you have to pay the remaining 15% in the future. The Government is just helping you to borrow 95% of the property value from the lender.

This step from the Federal Government is a nice one for the people of Australia but a recent survey has revealed that 8 out of 10 people in Australia are not clear about this scheme and they don’t even know whether they are eligible for this scheme or not. With an overflow of such schemes in the market, the first-time buyers of Australia re suffering from information overload.

The interest rates are at lowest, property prices are also down, and the government is launching new schemes frequently, with all these features combined there are surplus opportunities for first-time buyers to get home. Though 85% of the people who can be eligible of this scheme are not even aware of it.

Buying a new home is the biggest opportunity for the people of Australia and it can be better for those people if we provide them enough information about this situation.

It has now become very easy for the people of Australia to get home and the situation of the Australian market can get better if those people increase their savings. If people are confused about what is better for them and the people of Australia, this would act as an obstacle in taking the Australian economy back on track quickly.

Prices involved in buying property under this scheme:

To be eligible for this scheme, the property that you are buying should fall under this price segment:

State/TerritoryCapital City/Regional CentreRest of State
NSW$700,000$450,000
Vic$600,000$375,000
Qld$475,000$400,000
WA$400,000$300,000
SA$400,000$250,000
Tas$400,000$300,000
ACT$500,000N/A
NT$375,000N/A

 

5 Top Tips For a First Home Buyer

Will you believe us if we tell you that it’s completely possible to own your dream home just few years into your work life? Well, if this looks like a distant dream, a dream nonetheless, let us bring you closer to it. Let us apprise you of the possibilities and how we can make that dream a reality for you.

You would definitely want to read through these quickers, the top tips that we have collated for a first-time home buyer like you to help you understand what you are aiming for.

Research, research and more research

We just cannot emphasize enough on this point. Starting with assessing your own credit worth, eligibility, to the property you want to own, the neighborhood, the community, things like work to home commute, amenities, types of loans available, kinds of interests that you can opt for etc.

This list can be endless and quite overwhelming, especially for first-timer. But reach out for help, connect with the consultants or brokers who can hand-hold you through the entire process and get you the deal you want.

The deposit amount

It is advisable to save as much as you can in your initial work years because then you’ll be able to make the deposit figure from your end to the maximum. You should be aiming to meet at least 20% of the total property amount as deposit, so you can get 80% as the loan. If your deposit amount is less than the said 20%, you’ll have to take a Lender’s Mortgage Insurance (LMI) which is an insurance for your bank should you default in the payment.

The First Home Owners Grant (FHOG) and concessions

As the name suggests, this grant encourages the fence-sitters to take the first step and become the first home owners. The grant varies from state to state, and for the state of Victoria, the grant is $10,000. But if your home is in regional Victoria, you are eligible for the FHOG of $20,000.

The first home owner is also eligible for an exemption in the stamp duty payment. This amount too varies state to state, and Victoria offers a $10,000 grant and transfer fee concessions.

The First Home Owners Grant eligibility criteria

The criteria may vary state to state but overall in general, you need to be falling into these to be able to apply for the relevant grant and concessions.

  • The applicant must be a real person and not a legal entity, such as a company or a trust.
  • At least one applicant should hold a permanent visa or be an Australian or New Zealand citizen.
  • Each applicant must be at least 18 years of age.
  • The total value of the property must be below the cap amount. Each state has different property value cap amounts so it’s essential you check this.
  • This must be the first time that you and/or your spouse/de facto will receive a grant under the FHOG Act 2000 in any state or territory.
  • At least one occupant will occupy the home continuously for at least 6 months, commencing within 12 months of settlement or construction of the home.
  • All applicants (including spouses) must not have owned a residential property in any state or territory before 1 July 2000.

The other costs

Keep in mind that the costs don’t just mean the property value. You’ll have to factor in about 3-5% of the property value for extra costs like fees, charges etc without getting a brunt for it later.

You may also like to read more about this in our post on 5 top things to know before taking a home loan.

Do drop us a mail or call us if you wish to understand this in depth. We would be happy to help you unlock your new, first home!

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