6 Ways First Home Buyers Could Buy Sooner

The dream of home ownership is a tough one for many Australians to fulfil. After all, Australia is one of the most expensive countries to live in. But it’s not just the cost of living and property pricing that delays our property buying.

The road to home ownership can be a long and winding one for most. Considering the affordability of repayments, the location and lifestyle balance of the property, saving up the baseline entry level 20% deposit (if not, having to absorb further costs by paying lenders’ mortgage insurance (LMI)) and stamp duty are just some of the other factors to consider. In Australia, depending on age of the borrower and purchase price, it can take anywhere from two years to over six years to save for a deposit. This of course is also dependent on the income and expenditure of individuals.

Yes, it can be tough to get a foot on the property ladder, but first home buyers (FHBs) are not deterred.

About a third of millennials and a quarter of all Australians plan to buy a property in the next two years with many using the lockdowns in 2020 to up the ante on their savings.

There is no better time than now for FHBs to dive in and make that commitment – if possible.

Here is why:

1. Only a 5% deposit and no lenders’ mortgage insurance (LMI) – until 30 June 2021 and only through certain lenders – for those who are eligible!

Under the First Home Loan Deposit Scheme (FHLDS) eligible first home buyers can buy or build a new home with as little as a 5% deposit

Usually, a 20% deposit is required to avoid LMI costs (which can cost tens of thousands of dollars). But under the FHLDS, the government guarantees the remaining 15% of the value of the property purchase financed by the eligible first home buyer’s loan. Eligibility, property price thresholds and conditions apply.

2. One-off $15,000 grant to eligible owner-occupiers, including first home buyers

The Australian Government HomeBuilder grant provides eligible owner-occupiers, including first home buyers, with a grant to build a new home, substantially renovate an existing home or buy an off the plan home/new home. A $15,000 grant is available for contracts signed between 1 January 2021 and 31 March 2021.

The government has also extended the deadline to 14 April 2021 (inclusive) for those applying for the $25,000 which applies to eligible contracts signed on or after 4 June 2020 until 31 December 2020³. They have even lifted the property price cap for new build contracts in New South Wales to $950,000 and Victoria to $850,000 ($750,000 in all other states and territories).

Caution: lenders won’t assume you have this money because the grant is paid to you and not the bank – so be careful when working out how much money you have for the build (or even if T&Cs apply)!

3. Some lenders are offering bonus first home buyer incentives

From bonuses offered at settlement, conveyancing fee rebates, no account keeping and establishment fees, to no application and valuation fees – these are a few of the incentives offered by some lenders to attract first home buyers (however these include specific criteria and conditions).

4. Lenders’ mortgage insurance discounts are being considered by select lenders

Some lenders have been known to reduce the LMI to just $1 for eligible first home buyers! Others offer a percentage discount on LMI fees following settlement. Minimum deposits, maximum loan size and T&Cs apply.

5. Cash in on cash backs – certain lenders offer cashback incentives to first home buyers

Thousands of dollars of cashback to an eligible first home buyer with LMI and new purchase rebates are just some incentives that are on offer from some lenders.

Nabbing a great deal or incentive on your home loan could help you save money, but it is even more important to consider price (interest rates and fees) and features when choosing the right home loan.

6. Stamp duty concessions are available in some states

Besides saving for a deposit, stamp duty can be another big barrier to home ownership. However, most states and territories offer some assistance on this cost, including some exemptions, for eligible first home buyers.

Accessing one or more of these schemes or incentives could provide the assistance you need to buy your first home. It could also potentially save you tens of thousands of dollars.

But before considering any of these options, CONTACT US, so we can help steer you through the various options that may be appropriate for your specific situation. It is important to understand the various terms, conditions and eligibility criteria.

A FHB opportunity awaits

If you are one of the lucky ones who have remained financially stable, this could be your opportunity.

While there are always varying peaks and troughs in different property markets across the country, now could be an ideal time for FHBs to get into the market… Why?

  • Historically low interest rates make borrowing cheaper than it has ever been
  • Government incentives, spending and infrastructure initiatives continue
  • Consumer confidence is returning as we adapt to the new normal
  • Simpler lending rules for home loans are expected shortly

Knowing where to start, taking the initial steps and navigating through the whole process can be overwhelming. We can step you through the process from the initial stages so you can rest assured you will be well informed for one of the biggest decisions in your life. We have the experience and knowledge, along with access to a wide array of lenders, to ensure you are successfully guided through your first home buying journey.

How Healthy Are Your Finances?

Your 5 step financial health check

Many of us have faced financial challenges over the past year and as a result some may have asked themselves “how could I have better prepared for a financial emergency?”

Here are five easy steps to help take control of your finances and prepare for an emergency:

1. CREATE A BUDGET AND IDENTIFY ANY POTENTIAL CASH FLOW ISSUES

One of the first steps you should take is to determine whether you can meet your current and future financial commitments. A good way to do this is to prepare a budget including all your expected income and expenses. Include regular and irregular costs such as insurances, electricity etc for each period, so you know whether you’ll have enough income to cover your expenses when they are due. Your completed budget will show whether you are in surplus (your income is greater than your expenses) or deficit for each period.

2. BUILD AN EMERGENCY FUND

Setting aside some money in the form of an ‘emergency fund’ (usually in a separate bank account) will help to cover the costs of any unexpected expenses. Your washing machine or refrigerator may break down or you may experience mechanical issues with your car. Having some ‘rainy day’ or emergency savings means you won’t need to access your everyday funds needed for your budgeted expenses. Use your budget to determine how much you could deposit into an emergency fund and when.

3. PROTECT YOUR ASSETS

It is important to have sufficient insurance cover to avoid financial stress due to emergencies or unexpected events. Consider insurance cover for your home and contents, health, car, property investments and yourself – via income protection and life insurance

4. KEEP YOUR DEBT UNDER CONTROL

If you use credit (or take on other debt) to tackle financial emergencies, it can become challenging to repay the debt AND continue to cover the costs of everyday living and expenses. Credit card and other forms of debt usually involve high interest rates which could make the situation worse.

5. PLAN FOR THE FUTURE

If you are experiencing short-term cash flow issues it can be difficult to keep a long-term view, but it is important to always keep a degree of focus on growing your savings and assets for the future. Whether it might be for education costs, family celebrations, upgrading, renovations or your retirement, is it important to focus on the short AND the long term.

We have many tools, techniques and strategies to help you through your financial challenges and reach your goals. Call us today for a confidential discussion.