Seven is my lucky number and I would like to share Seven Home loan essentials in Seven Weeks
Home Loan Essential 1
Buying your First Home! …
Buying your first home is an exciting and satisfying experience. There are a number of things that one has to be aware of:
• Various government benefits for first home buyers
• Understanding Lender requirements before they give you a loan
Government grants and stamp duty exemptions can save you valuable $$$ off the cost of your new property in some states, if you’re eligible! First home buyers get 2 main benefits. First is a cash grant handed to you (called the first home owner’s grant) and second is an exemption of stamp duty costs associated with the purchase of a property.
Things to consider for FHO (First Home Owner)
1. The First Home Owners Grant
Each state has different qualification rules and pay different grant amounts. The grant varies from $5,000 in some states to $20,000 in others. To be eligible for the First Home Owners Grant you must be an Australian citizen or permanent resident and you (and your
spouse / partner) must have not previously owned a “home” in Australia. If there are 2 applicants, at least one applicant needs to be an Australian citizen or permanent resident to qualify. All states require the property to be a “brand new unlived-in property”. Click on the link to learn more about the FHOG: First Home Owner | State Revenue Office
2. Stamp Duty Exemption schemes
Whenever a property transaction occurs, the state governments usually charge a stamp duty cost as a percentage of the cost price. See First Home Owner | State Revenue Office page for more information.
3. Deposits required
The amount of deposit you need to come up with. Generally, the maximum loan possible to assist with your purchase is limited to 95% of the value of the property (note lenders will charge a mortgage insurance premium at this level which usually is capitalised onto the loan, so some borrowers can end up with a loan at a level up to about 97%-98% of the cost price). Therefore, the amount of deposit you need to provide is mainly dependent on the loan percentage, whether or not one is eligible for first home buyers grant, and pay a stamp duty cost. It differs in each buyer’s circumstance and applicable according to the purchase price, It also varies if you are purchasing a brand new or an established property, and which state you are buying in. The larger the deposit, smaller the loan amount will be and better the interest rate that one must pay when borrowing funds from the banks. This means you’ll have smaller repayments and the interest you pay will also be less. Also note that various lenders may also have rules requiring you show a “genuine saving which is a minimum of 5% of the cost price over a 3 month savings period” . This is called “genuine savings and the requirement is on a case-by-case basis and also dependent on your final required loan to value ratio. As a Best Practice keep your savings habits consistent, your accounts in order and get a copy of your credit file.
4. Loan capacity
Your capacity to borrow money from the various lenders as determined mainly by your income and your personal situation i.e. married/single, children/no children, debt levels, etc.
5. Consider your options when choosing a lender
Use a Mortgage Broker: speak to the experts, they are there to do the Hard yards for you. DBIJ Finance is the expert Just for you.
6. Loan Settlement
The day the loan is drawn down and you get the keys to your First Home. Organise a good Solicitor or Conveyancer to make this transition hassle free.
7. Your repayments
What your loan repayments will be at various loan amounts. Talk to your broker to show you how to save interest and pay of your loan quicker
Watch this space for home loan essentials 2 in our next edition