This is a new and exciting time in your life, and we want to make it an easy and positive experience! Helping a first home buyer to achieve their home ownership dreams is special and we aim to help you feel stress-free and confident about the whole process.
‘How much deposit do I need to have?’ is the most commonly asked question, especially by a first home buyer as it is the first steppingstone towards buying a house. A bank will require a 5-10% deposit, but the more savings you have, the better! When borrowing over 80% of a property’s purchase price, the banks make you pay Lender’s Mortgage Insurance (LMI) but anything under 80% there is no LMI. This can be expensive so the greater the deposit amount, the less LMI you will have to pay!
Not only are savings important, a big determining factor is your borrowing power, which is how much you can actually borrow from a bank. They will look at your wages but also take into consideration any expenses you have, such as living expenses, loan repayments, credit cards & Afterpay. From here they will decide if you can afford to borrow the amount required. With interest rates changing, the more the loan repayments will increase and the lower everyone’s borrowing power becomes! Check out our calculators to understand more!
There are expenses that come with purchasing a house which can sometimes be forgotten, the main cost is stamp duty. A first home buyer does not have to pay this (unless they purchase a property for more than $600,000). It is also important to note that there are fees for mortgage registration, transfer registration, lender application fee and legal fees.
There are schemes available to a first home buyer to help reduce LMI:
First Home Guarantee (FHG)
This is where the Federal Government acts as the mortgage guarantor and they act as the insurer for the amount borrowed above 80% of the purchase price. It means you don’t have to pay LMI, but they don’t own a portion of your home, they just insure it. This is available to anyone however they also have set aside special places for regional first home buyers, making it easier for them to get access to this scheme! A similar scheme is being run by the State Government, however, be careful as they will own a portion of your home at the end!
First Home-Owners Grant (FHOG)
A Federal Government Scheme that grants you $10,000 to help with securing your first home! They want to assist you with the purchase, but there is a different set of qualifications to get a spot in the scheme. If you want more information, get in contact with us.
Family Guarantee
There is an option for a family member to act as the mortgage guarantee when you borrow more than 80% to reduce the LMI. They will put their home as additional security and they become responsible and liable for a portion of your loan, which all individuals must understand the risks and be very comfortable with their decision.
