6 Top Tips To Buying Your First Home
Buying your first property is both exciting and daunting. Here are some tips from people who have been through the journey
- Know the true cost of property – Knowing the maximum you are willing to spend on a house or apartment is one thing, understanding the true cost of the property is another. Make sure you take into account stamp duty, mortgage insurance, loan application fees and legal costs.
- Take advantage of government incentives – Check out the varying State Government incentives, including the First Home Owner Grant and stamp duty concessions, and the Federal Government’s First Home Saver Account scheme.
Clients are often unaware of the full extent of the incentives available to them to save for a deposit and then to buy their first home. The rules are constantly changing and vary from state to state.
One incentive that is uniform across all states and has stayed stable since being launched in 2008 is the First Home Saver Account scheme operated by the Federal Government. Under the scheme, the government contributes up to $1,020 per year (equivalent to 17% of the first $6,000 your clients contribute per year), provided conditions are met. Plus the interest earned on the account is only taxed at 15% and clients don’t pay any tax when they withdraw the money to pay their deposit.
The state-based first home owner grant and stamp duty concessions are far less stable and consistent.
For example, the New South Wales Government announced in its June state budget this year that it will abolish its current first home owner grant scheme on 30 September 2012. In its place comes the First Home Owner Grant (New Home) scheme which offers a first home grant of $15,000 for buyers of new property up to $650,000 in value. First home buyers of existing homes will not be eligible for a grant.
All other states are continuing with their existing $7,000 grants on new and existing homes for the foreseeable future, with varying maximum values of property eligible.
Even more generous is the exemptions and discounts on stamp duty in some states. In some cases, this could save you more than $20,000. However, the exemptions and concessions vary markedly between states
- Get your cash flow under control – Set yourself a savings goal and then a budget that will get you there. Make sure before you borrow that you have demonstrated (if only to yourself) the discipline to make the mortgage payments.
- Select a home loan that is right for you – don’t just select the lowest interest rate; think about the right mix of variable and fixed rate loan, flexibility with your loan period and whether you need a redraw facility.
- Get advice – Find a financial planner that you trust to guide you through the process and keep you accountable to your goals. A mortgage broker can help you get the best home loan package for your needs while a buyer’s agent can help you find the right property and negotiate the best price.
- Review insurances before you settle on your mortgage, it is important to review your life, TPD, income protection and trauma cover to make sure it is adequate to cover mortgage payments.
If you need assistance with any of the above please contact our office
