Find out how to buy a home and take out a mortgage, get tips on what to do if you can’t save the deposit you need and work out much you could borrow. Ask us about the First Home Owner Grant.Speak to an expert broker
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• For eligible first home loan buyer under this scheme government will act as the mortgage insurer guaranteeing home loans with a minimum deposit of 5% of the property value.
• Initially, 10,000 Scheme places were made available for eligible first home buyers on 1 January 2020, and a further 10,000 have been made available from 1 July 2020 for the 2020-2021 financial year
There are several eligibility criteria first home buyers must meet to qualify for the first home loan deposit scheme:
• A minimum deposit of at least 5% is needed (most lenders require the deposit to have been accumulated through genuine savings.
• Only Australian citizens who are at least 18 years of age and hold a medicare card are eligible. Permanent residents are not eligible.
• Single first-home buyers earning up to $125,000 p.a. or couples earning up to $200,000 p.a. are eligible. Income from the financial year preceding the year in which the loan is entered into will be assessed.
• Couples are only eligible for the Scheme if they are married or in a de-facto relationship. Other persons buying together, such as siblings, parent/child or friends, are not eligible.
• Loans under this Scheme require scheduled repayments of the principal of the loan for the full period of the agreement. Interest-only repayments for a specific period are accepted only for loans relating to both the purchase of vacant land and the construction of a house on the land.
• Applicants must be first home buyers who’ve not previously owned or had an interest in a residential property either separately or jointly with someone else. This includes residential strata, company title properties, regardless of whether it was an investment or owner-occupied property and whether it was ever lived in.
• Applicants must intend to move into and live in the property as their principal place of residence (i.e. they must be owner-occupiers).
The value of homes that can be purchased under the Scheme has been set (price caps) on a regional basis reflecting the different property markets.
Initially, the 5% home deposit Scheme will only be available to 10,000 borrowers a year which is only around 10% of the total number of Australian who purchased their first home in 2018.
More importantly, apart from the 5% deposit required, first home buyers must also provide evidence of funds to cover stamp duty, legal fees, bank fees etc. where the loan to value ratio is above 95% of the property value.
To be eligible, you must:
• Be a current or prospective owner-occupier – not an investor
• Be a natural person, not a company or trust
• Be an Australian citizen
• Earn $125,000 or less a year for singles or less than $200,000 a year for couples (based on your last tax return, which cannot be earlier than 2018/19)
For context, a single person earning $125,000 is in the top income decile, meaning they earn more than 90% of other Australians.
The income caps are the same that applied to the first home deposit scheme, although the average income of applicants to that program was $67,387 for singles and $109,525 for couples.
There is a lender currently offering $2,000 cashback when you borrow loan on which LMI is payable. Please contact us to understand this further.
It really comes down to what’s most important to you from the heaps of checklist items. Try and tick the boxes from the below. Call us if you need a hand.
• Good access to amenities
• Well established suburbs or developing suburbs
• Good schools
• Finding the vibe
• External / internal finishes
• Car spaces / parking
• Construction type
• Location Location and Location
• High rental suburbs vs high owner occupied suburbs
• Rental vacancy rates for investment properties
• Demand vs supply for the properties
• Development approvals or rejections
• Potential to add value by adding rooms or parking spaces
• Renovation potential
• Determine your budget
• How much can you borrow
• Hunting for home loan
• Know the deals in market
• Get approval
• Finding your home
• Don’t forget building inspections
• Making an offer
• Legal legwork with conveyancer
The main government fees associated with buying a home are:
• Purchase stamp duty: This is the largest expense. It’s a tax levied by your state government. There may be stamp duty concessions available – please get in touch with us to understand this.
• Transfer fee: This is a government fee for registering your name on the title of the property and removing the vendor’s name.
• Registration fees: This is a government fee for registering your lender’s mortgage on the title of your property. If the vendor has a mortgage on the property then you may be charged to remove their mortgage, the cost of which will be reimbursed by the vendor at settlement.
• Conveyancing costs: You’ll need to hire a conveyancer or solicitor to handle the transfer of the property into your name. This will cost approximately $800 to $1,500.
• Inspections / Reports: You may need a building inspection, pest inspection and a strata report. These can cost up to $600 in total. Please discuss these reports with your conveyancer to see if they are required.
• Loan fees: Some lenders charge an application fee, settlement fee or valuation fee. These fees vary from $0 to $900.
• Lenders Mortgage Insurance (LMI): If you’re borrowing over 80% of the property value then you may pay LMI.
If you’re a first home buyer, buying a new property or building a home, you may be eligible for additional concessions or grants. Please contact us to know government grants.
Alternatively, you may also qualify for the First Home Loan Deposit Scheme if you’re a first home buyer.
There are a range of additional costs which aren’t included in this calculator:
There may be other costs such as repairs to the property, renovations, hiring a removalist and council / water rates adjustments. You should discuss the costs of buying a property with your conveyancer.
Note that you’ll have to pay a range of different costs when selling property too.
When you apply for a loan, the lender may ask for evidence of your deposit and won’t approve your loan unless you can prove that you have enough funds to cover the costs, as well as the difference between the purchase price and loan amount. This is known as a Funds to Complete Calculation.
They do this check because if there’s a shortfall of funds, some people end up taking out a short term loan or credit card to make up the difference. This additional loan can then impact their ability to repay their mortgage.
Use our How much Can I Borrow Calculator to estimate your monthly mortgage payment. You can input a different home price, down payment, loan term and interest rate to see how your monthly payment changes.
Use our Repayment Calculator to estimate your monthly mortgage payment. You can input a different home price, down payment, loan term and interest rate to see how your monthly payment changes.
Use our Extra Repayment Calculator to estimate your monthly extra repayment. You can input a different home price, down payment, loan term and interest rate to see how your monthly payment changes.
Use our Mortgage Offset Calculator to estimate your numbers. You can input a different home price, down payment, loan term and interest rate to see how your monthly payment changes.
Use our Stamp Duty Calculator to estimate your stamp duty payable
Either you have any doubt, or you want to get your next loan with us, book a time for a call. Our promise to you:
DEALS MORTGAGE ESSENTIALS
Lenders Mortgage Insurance (LMI) is a mandatory insurance policy for mortgages above 80%. If your down payment is less than 20% of the mortgage, you will have to pay for it. But LMI can be waived, or simply not taken. Find out how.
Start web chat or book an appointment to start your mortgage application. See the list of documents or information you’ll need to provide.