First Home Buyer

Get the down-low

In 2020, COVID-19 certainly changed a lot about the world we live in and we saw the property market slow down throughout lockdown. However, we have come out the other side and prices are healthier than ever and first time buyers are unconcerned by the economic confusion the pandemic has caused. The sheer volume of first timers (120,000 have had loan approvals in the last year)** entering the market to buy or build is extraordinary. But, because buying is a new experience for these buyers, there are understandably lots of questions and some general myths (often brought on by anecdotes passed from person to person) that I’m debunking on the daily. Here are some of the questions I’m coming across lately, answered for the good of next year’s buyers.
  1. How will you decide which loan is best suited to my circumstances?Home loans are not created equal, but neither are the priorities of all borrowers. A proportion of property buyers prefer a flexible home loan, while others want a product that ensures their long-term peace of mind and some just really want to pay off their loan as quickly as possible. Once we discuss your circumstances, we look at over 60 banks and lenders to size them up and see which product best suits your scenario.
  2. Can you help me understand my borrowing capacity?Your income, your financial commitments (think car, credit card, personal loans…), whether you’re buying with a partner, have children and how long you’re happy to make repayments for all affect borrowing capacity. The first step I recommend is a mortgage calculator - It’s important to note that this is a guideline only. What it doesn’t account for is lenders: their rates, their policies, their borrower preferences etc. That’s why, when you’re ready, we’ll do a Fact Find and get a clear picture of how much you can borrow.
  3. Can you tell me if I'm eligible for any government grants?^Absolutely, I keep my finger on the pulse of all the incentives. You’ll be pleased to know, there are more government incentive schemes than ever before for first home buyers. For instance, in NSW you can access grants up to $35,000, in VIC it’s up to $45,000, and in WA and the NT you’re looking at closer to $55,000 in assistance. Queensland offers a $15,000 first home owners grant with additional kickers for regional property.***There’s a grant of $25,000 for people building rather than buying (including first timers), and there’s a government guarantee that allows you to contribute a 5 per cent deposit rather than the standard 20 per cent as a first home buyer. Let me tell you what you’re eligible for.
  4. Is it a good time to buy right now? There are some major factors in your favour, first time buyers. The biggest of which is the cost of borrowing money. In fact, borrowing has literally never been cheaper. The Reserve Bank of Australia cut its official cash interest rate from 0.25 per cent to an ultra low 0.1 per cent. And that’s the third time this year that the central bank has decreased the interest rate! As a result, most of the big banks are offering you a fixed rate under two per cent. Little lenders are offering competitive products too.
  5. Isn’t there a big new stamp duty exemption? There sure is. But it’s not for everyone. We’ve seen through the 2020-21 state budgets for Victoria and New South Wales that there will be stamp duty concessions available. In VIC, there’s a brand new stamp duty concession of up to 50 per cent for off the plan or 25 per cent for an existing property. Though, it’s important to note there is criteria to meet in order to be eligible for this. NSW is looking at an ambitious plan to make it optional. Other states offer some stamp duty concessions too, and … I can tell you what’s on offer. Just reach out.
What other questions do you have as a first home buyer? Send them my way.
This document provides an overview or summary only and it should not be considered a comprehensive statement on any matter. You should before acting in reliance upon this information seek independent professional lending or taxation advice as appropriate specific to your objectives, financial circumstances or needs. Information included has been sourced from third parties and has not been independently verified.  **First-timers pile in as house prices start to rise, John Collett, 17 November 2020, The Sydney Morning Herald - Online^First-timers pile in as house prices on rise John Collett, 18 November 2020, The Sydney Morning Herald.***MIL-OSI Australia: Queensland jumps the queue on Home Builder applications, 31 July 2020
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