Entering the Market as a First Home Buyer

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Being a first home buyer may feel like you are standing on a mountain looking out into a foggy abyss. You are not quite sure which way to go, but with the right tools you can make your way to the top. 

At the moment, the property market is growing at a strong rate, so it may be a good time to enter the market. There are certain costs as well as benefits which may affect your decision where to buy. No matter what your situation is, with the right knowledge and discipline, the dream of owning your own home can become a reality. 

Costs for purchasing
Even before signing any contract of sale there are different fees to consider. Legal costs, building and pest inspections are usually recommended to ensure the house is in an acceptable state before buying. These inspections can total around $500 to $1,000. 

Loan establishment fees will vary depending on which lender you choose. Some possible fees include an establishment fee, legal costs for setting up the loan, costs for the lender’s valuation of the property and Lenders Mortgage Insurance. 

There are usually legal costs in arranging the mortgage. You will more than likely need advice from a solicitor or conveyor about the property amount. 

Stamp Duty and property tax are both state taxes. Depending on the state, not all first home buyers have to pay stamp duty and the property tax is usually only payable for people who own multiple investment properties or using a company or trust to buy the property.

First Home Buyer Benefits
The First Home Buyer Grant is a cost to the federal government but managed by the states to give Australians the chance to enter the property market. However, each state is different and these grants have, and most likely will, change over time. Please see the following websites to get the most up to date information on what grants you are eligible for:

New South Wales: http://www.osr.nsw.gov.au/grants 
ACT:  http://www.revenue.act.gov.au/home_buyer_assistance/first_home_owner_grant 
Queensland: https://greatstartgrant.osr.qld.gov.au/ 
Western Australia: http://www.finance.wa.gov.au/cms/content.aspx?id=344 
Northern Territory http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/Pages/default.aspx 
Tasmania: http://www.sro.tas.gov.au/ 
South Australia: http://www.revenuesa.sa.gov.au/generic-pages/i-am-a-first-home-buyer 
Victoria: http://www.sro.vic.gov.au/sro/sronav.nsf/Home+Page/SRO~Home+Page?open 

Qualify for a Loan

Applying for a home loan is a serious commitment. You will be borrowing hundreds of thousands of dollars from the lender and be expected to pay it back. There are several factors the lender will check.

Genuine Savings: You need to be able to show that you have saved enough money for a 5% deposit over a certain period of time (minimum 3 months). The lenders need to see that you have the financial responsibility to work towards a goal. 

Liabilities: These may include personal loans, car loans and credit cards. The lender needs to see what other financial commitments you have so they can factor them in to see if you will be able to afford all repayments.

Credit History: A credit history will show any credit cards or other loans that you are paying off. If you do have a history of credit, the lender will check to see if you are able to pay your repayments on time. 

Employment history: Your income is one of the most important factors as that is what will be paying off the loan. If you have recently changed jobs or are on probation you may not be applicable for a loan, however, have a chat with your lender.

Planning ahead is one of the best tools to help first home buyers be successful. However, there may be some things you don’t understand and that is where your lender comes in. They know the industry extremely well and can give you plenty of practical help throughout the process.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Anouska Linz

Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.

For more information on our home loans, visit www.statecustodians.com.au or call 13 72 62.

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