Tips for First Home Buyers

If you or your partner are buying or building in Australia for the first time, we have a number of tips for you. Most importantly, two government programs can give you free money and/or save you thousands in fees.

Firstly, the government will give you $7000 towards your purchase.

The money is part of the First Home Owners Grant; it’s a national scheme, funded by the Federal Government and administered through each state or territory. It doesn’t matter if the home is new or old, and it doesn’t matter how much you earn. As long as your home costs $835,000 or less, you’ll get your $7000.
Who qualifies for the First Home Owners Grant?

Of course there’s fine print; you’re getting free money after all. In addition to the above, other basics include:

• You have to be an Australian citizen or a permanent resident.
• You must be 18 or older.
• You have to a ‘natural’ person, which means you can’t buy the property through a company or trust.
• You must live in the property you’re buying. The government won’t give you $7000 to buy a business or investment property.
• If you’re buying an existing home, you need to move in within a year of settlement. If you’re building, you have one year from the end of construction.

You can apply directly to the government for the $7000, or you can get it through us when you apply for your mortgage. The money is typically available on the day of settlement.

You sure can. If this is your first property, in many cases the government will exempt you from transfer duty – which can save you thousands of dollars. This is called the First Home Plus Scheme.
The requirements are similar to the First Home Owners Grant; you have to be Australian or a permanent resident, over 18, be a natural person intending to live in the property within 12 months, and so on.

The government waives stamp duty on all properties up to $500,000. That’s a saving of up to $17,990. For homes worth between $500,000 and $600,000, you receive exemptions on a sliding scale. For anything priced at $600,000 or higher, you have to pay the full duty.

The rules are slightly different if you buy vacant land. You get a full exemption on properties up to $300,000 – saving you up to $8990. A sliding scale then kicks in, stopping at $450,000. After that, you pay the full duty.

After you’ve exchanged contracts to purchase your first home or vacant land, you can submit your application to the government, along with your Agreement for Sale/Transfer.

Buying your first property is a big deal. It could be the most important purchase you ever make. With so much at stake, we recommend you keep the following in mind:

• Stay focused on your deposit. It can be tempting to rent a great place and fill it with nice stuff, but how much of that money could you instead save for a home of your own? The larger your deposit, the less you have to borrow. The less you borrow, the less interest you’ll pay, and the quicker you’ll pay off your mortgage.
• Be realistic about what you can afford. After you’ve bought your home, you’ll have to pay rates, insurance and maintenance, on top of your mortgage. You might also have higher transport costs, if you move to the suburbs. When you add all this up, is it more than what you’re currently putting into savings and rent? If it is, then maybe you can’t afford it.
• Hope for the best, plan for the worst. Interest rates rise, people lose their jobs or get sick, children come along. All these developments can affect your ability to repay your mortgage. Factor them into your planning.
• Exercise caution. Speak to a lawyer or an accountant before making any big decisions.
• Be wary of any company that offers you a mortgage when you haven’t been able to get one before. They could be charging you more interest or have other traps hidden in the fine print.
• If the loan seems too good to be true, it probably is. For example, land-house packages sometimes hide the cost of the loan in the house price. As a result, the loan seems small, but you’re actually paying extra for the home.