Buying your first home is one of the biggest things we ever do. Some people have an amazing experience, while others find it a stressful and daunting process. Here’s a few simple tips that will make things a little easier first time round.
Do I have enough savings?
To get approved for a home loan most financial institutions currently consider 5% of the purchase price to be the minimum deposit. However, if the deposit is under 20% you will most likely have to pay “Lenders Mortgage Insurance” (LMI). Saving a 20% deposit isn’t easy, but paying thousands for LMI is dead money, and doesn’t contribute to your mortgage repayments. If you can save that initial 20% and not need to pay for LMI, it gives you a great head start on your loan repayments because the principle amount you owe is less. This means that the total amount of interest that will be repaid over the life of the loan is also less. Combine that with not paying LMI and you could literally save yourself thousands in the long run. For more information on loans and your options, why not talk to a mortgage broker such as Loan Market. Loan Market has access to over 800 loan products from 30 different banks and lenders. For more info head to www.loanmarket.com.au
What is an FHSA?
A First Home Savings Account (FHSA) is an account that you can open with many different banks and credit unions. While receiving interest from the bank on deposits you make into the account, the government will contribute 17% p.a. on the first $6000 deposited each financial year. Once you consider the bank interest (at time of writing 3.5%) and the government’s 17% contribution, you could earn a very tidy 20.5% (subject to a small amount of tax). It’s easy to see how this could help bolster your savings and make that 20% loan deposit (mentioned above) a little more achievable. However, rules do apply. There is a $1000 minimum deposit per financial year for 4 financial years (which can be non-consecutive), and this money can only be withdrawn as a deposit on your first home or be contributed towards your mortgage, otherwise it can be rolled over into your superannuation. Check the ASIC website for more details.
Do I need Pre-Approval?
In short, no. But having a pre-approval puts you a step ahead of other buyers that don’t. It will give you a better chance at buying the home you want when you want, without having to wait for the bank to approve your loan later. Having pre-approval also means that you can house hunt with a price range in mind. If you’re planning to buy at auction, pre-approval is a must as it gives you a clear idea how high you can bid on the day.
Grants for first home buyers.
Grants for first home buyers vary from state to state. In NSW first home buyers are eligible for a $15,000 grant on new constructions until December 31st, 2015. From January 1st, 2016 this amount will drop to $10,000. For people purchasing a pre-existing home, the grant is $7000. To be eligible for this grant the purchase price or land/construction cost currently cannot exceed $650,000.
How do I find the right property?
Finding the right home for you is everything, and the friendly staff at Ray White Quirindi can help you out. With access to the widest range of properties in Australasia and over 100 years experience in the property business, Ray White is a name you know you can rely on.
To contact one of our friendly sales team, please click here.