Buying a house for the first time?
It’s no question that applying for a first home buyer loan is a daunting, albeit exciting process for first-time homeowners. With the help of a professional, you can navigate the process easily and with the least stress possible.
In this blog post, I’ll provide some first home buyer tips. Keep in mind that everyone’s situation is different, so please consult with a trusted mortgage broker to get tailored advice. With that said, let’s get started!
What to know as a first time home buyer
What is a first home buyer?
Basically, a first home buyer is someone buying a property (i.e., house or flat) who has never owned one in the past and no property to sell. If you’re a first time buyer, this precludes the possibility of you being a homeowner, an investor, or someone who is already mortgaging or re-mortgaging an existing home.
Being aware of what is considered a first time home buyer would be helpful as some government grants have guidelines on what constitutes a first home buyer and who are eligible.
What is needed for first time home buyer?
Below is a list of expenses you can expect to comply with. Each one of these costs will vary depending on your personal situation and the state, territory, and area you want to buy in.
- Legal/conveyancing fees
- Loan application fees
- Stamp duty / state government taxes
- Pest and property inspection fees
- Lenders Mortgage Insurance (LMI)
- Land tax
- Fee for buyers’ agents
- Council rates
- Strata searches
- Utility connections
Industry secrets from a mortgage broker: 3 tips for first time home buyer
There’s plenty of people out there who don’t realise there are many ways to buy their first home. I’ve compiled a list of home buyer tips for all those first home buyers that need guidance on how to apply for a home loan first time buyer.
Tip #1: Save save save…
How to save up for a house: This is where you work very hard and have a deposit, this usually takes many years as the higher the prices are the bigger deposit you need. How much deposit needed will vary from lender to lender but here are some simple rules to go by when buying a house to live in (not investment):
- Zero deposit will get you nowhere
- 5% deposit will get you in with very few lenders, you will have to pay a hefty LMI (lenders mortgage insurance) fee though
- 10% deposit will get you in the market with most lenders, you will still have to pay the LMI fee but it won’t be quite as much
- 20% deposit is as good as it gets, banks love this and will reward you with lower interest rates, more options and you won’t have to pay any LMI at all.
Tip #2: Build a new home and take advantage of the Government Grants
Often the government has several first home buyer grants available to help first home buyers with their deposits. The eligibility criteria for any first home buyer scheme will vary quite a bit from state to state.
Here are some government grants you can take advantage of as a first home buyer:
- First Home Buyer Stamp Duty: The first home buyer stamp duty exemption for NSW residents provides eligible purchasers with full stamp duty exemptions on new and existing homes valued less than $800,000. Partial stamp duty concessions are available for new and existing homes valued between $650,000 and $800,000.
For QLD residents, full stamp duty exemptions on new and existing homes valued less than $500,000, and a part concession is available for homes valued at from $500,000 to $550,000, or, a block of land valued at under $400,000. First home buyers can also save up to $8,750 in buying costs, when purchasing their first home in Queensland.
- First Home Guarantee (FHBG): Under this initiative, an eligible home buyer can purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance.
- First Home Owner Grant: This is a one-off grant is payable to first home owners in Queensland that satisfy all the eligibility criteria. If you’re eligible for the grant, you can get $15,000 towards buying or building a new house, unit or townhouse (valued at less than $750,000) that you will live in.
For NSW residents, a $10,000 grant is available when you buy or build your first new home. The purchase price of the newly built house must not exceed $600,000, while the price of purchased vacant land plus value of the home building contract must not exceed $750,000.
And here are some important things to look at with this option:
- Grants are usually only for buying land and building a new home or buying a brand-new home that has never been lived in
- You should visit your local states grant website to see if you qualify – if you or your partner have ever owned a property you will most likely not qualify
- There are costs during construction you need to consider, you will need to keep renting and pay some loan interest while the house is getting built…
- The same deposit principles as option 1 apply, but that extra $10 or $20k the government gives you will help in a massive way…
Tip #3: My favourite, getting help from mum & dad – They use their property as your deposit
This option is becoming super common with houses getting so expensive. This one can allow you to buy a house with ZERO DEPOSIT. Yes, that’s right, you don’t need to have any money saved, however I recommend you get saving first even if to prove to yourself you can afford to own property…
Pros for this option:
- You can get into a property without having a deposit saved
- You won’t need to pay LMI, this often saves around $5,000 – $12,000 straight up
- Your parent’s property would be putting up a 20% deposit, this means you can access the lenders better deals
- Some lenders will even let you consolidate (pay off) some other debt with this option so your cash flow remains healthy
Cons for this option:
- Mum & Dad and their property will be accountable for your actions. If you screw up the bank will come to them to fix the situation
- There are eligibility requirements for Mum & Dad, we can check these out for you in about 30 seconds
- That’s about it!
All the above options can work well if they fit your circumstances, I often find people would rather not use Mum & Dad but when they see the massive benefits many of them decide to ask the question. I will always arm clients with all the info they need and guide them through these options in much more detail before they decide on a strategy.
Work with Q Financial
Q Financial services prospect homeowners in Coffs Coast to the Gold Coast and Brisbane. We are passionate about helping people who spend their lives helping others.
And, over the last 8 years, we have built significant expertise in understanding which lenders look most favourably upon applications for health care workers, teachers, and PAYG professionals. We specialise in:
- home loans for teachers
- home loan for healthcare workers
- home loans for nurses
- home loan for doctors
- home loan for medical professionals and medical specialists
- home loan for not-for-profit workers, and more!
If you would like anymore info, feel free to send me a message, call me or email me anytime, I’m always happy to help.
In fact, I often help first home buyers plan way before they buy a house — because without a plan, how are they supposed to get ready?
