Just a year ago it was thought that the housing slump would have corrected itself by this point in time, but analysts missed the mark. Instead, homes are selling at slower-than-normal rates and this leaves the door open for young people looking to get on the property ladder.
From government grants to stamp duty concessions, those looking for a low initial deposit with an LVR of 95% or greater now have an opportunity to buy a new home. If you are a first home buyer, the following first home buyer tips and general information may help you step onto the first rung of the ladder with ease.
It’s All About Supply and Demand
At first, it was only about an oversupply of apartments, but that oversupply trickled down to new builds. Many areas of the country have produced too many new homes and this quickly turned the tables from what was considered a seller’s market to a buyer’s market.
Mortgage insurance companies are reporting that the greatest percentage of all home loans are in the first home buyer market. Most telling is the fact that new home loans are being written for those home buyers with an initial deposit of 10%, and often less than that!
How Much Can I Borrow?
If you are considering buying a property and you are a first home buyer, the very first thing to do is calculate your borrowing power. With a user-friendly online calculator, you can determine how much you can borrow. These calculators will tell you two very important prices.
One is the amount you would need for a deposit and the second is the highest price you qualify for. You will be asked to enter variables in the online calculator.
The information needed would detail who will apply for the home loan such as a single person or a couple, and the number of occupants, including children, who will be occupying the new home.
Of course, your annual income, current living expenses, and outstanding loan repayments and credit card debt you have is important, but once that information is entered, you will see what you can expect to pay on a deposit as well as the ceiling price for a new home.
A Look at Realistic Home Loan Repayments
Then you can take it a step further with a home loan repayment calculator. Just because the figures indicate that you can pay a certain amount on a new home doesn’t always mean you will be comfortable doing so.
Also, remember that these are just estimates. When you estimate your home loan repayments, it is wise to bear in mind that rates and terms may vary from lender to lender.
Help from Government
The First Home Owner Grant (FHOG) is offered to eligible candidates who meet specific criteria. This grant is funded by each individual territory or state and will likewise be administered by the area in question. Only new homes are eligible properties for the FHOG. Stamp duty concessions follow a similar structure in guidelines but the cut off is $530,000 and this applies to all properties, new and previously owned if they are priced higher than $430,000.
A Quick Summary of Those Big Opportunities
With all of the above being said, the best tip would be to consider putting an offer in on a new build. The logic behind this is quite obvious in that only new builds qualify for the FHOG. When you stand to get back 10% of the selling price, that amounts to a sizeable amount of money.
Consider for a moment a home priced at $100,000 with an initial 10% deposit of $10,000. Then, with the stamp duty concession, the amount you are required to pay upfront can be significantly reduced if the property falls within the stamp duty concessions parameters.
Indeed, there are big opportunities for first home buyers, so if you have been teetering on your decision to buy, this information might be just what you need to get you started. Remember, the slump in the housing market won’t last forever and lenders may not offer the same deals you can get today. Now really is the time to get on the property ladder and you’d be foolish not to try.
Alex Morrison has worked with a range of businesses giving him an in depth understanding of many different industries including home improvement, financial support and health care. He has used his knowledge and experience to work for clients as diverse as Acacia Pest Control, Cosh Living and Me Bank to help them reach their business goals.