First home buyers guide

We understand that buying your first home is a big step.  To make it stress free we've put together some ideas to help you.  Our Zar mortgage consultants will also guide you through the process. Below are some of the options which may be available to assist you with your first home although we suggest speaking with a consultant as other options can be available.

Deposit Requirements

In the current lending environment most lenders are looking for a minimum 10% home loan deposit although there are options which may allow you to purchase with a 0% home loan deposit with 100% home loan mortgages.
A home loan deposit is a very important consideration when planning your property purchase. When lenders look at a deposit they will consider several factors in deciding what level of deposit the will be happy with.

 Factors which affect a deposit for home loan

How do I work out how much deposit I have?
The easy way is to speak with your Mortgage Broker although the simple way is to divide the amount you can use towards the property by the purchase price e.g;
Amount for property $22,500 divide Purchase Price $450,000 = 5%
Remember that the amount for the property is after you pay stamp duties and other fees like legal, building inspections, etc.

Current Bank

A factor which the majority of the general public are unaware of is that you the bank you have your accounts and credit cards with can greatly affect your deposit requirement. The lenders like this as it gives them some history on how you operate your banking accounts. In some cases holding a credit card with a bank for 1-6 months can reduce your deposit from 10% to 3% which based on a $450,000 purchase is a difference of $31,500 in savings. To overcome this factor we strongly suggest speaking with your mortgage broker at least 6 months prior to your purchase. This will allow them to offer you more product options when it finally comes to purchasing. If you do not have 6 months it is still worth speaking

Savings History

If you have over 6 month’s savings history you will probably not have an issue. Savings history requirements vary between lenders and range from 1 day – 6 months. In addition some lenders will have differing history requirements dependant on how much deposit you have to contribute. E.g. 5% deposit may require 3 months, 3% may require 6 months and 10% may not require a history. As these policies change regularly we believe it is best to get some advice from your mortgage broker.

Credit History

If you have a clean credit history (No Defaults) you should not have an issue with the lower deposits. If you do have minor issues you will probably require between 10-20% deposit.

Borrow up to 100% of the property value

Even without a deposit you may be able to borrow 100% of the purchase price of your new home.
You will need to show a good savings history over the previous six months, and rent payments may be counted as savings.
If you qualify for the FHOG, this money can be used towards your purchase costs. 

Family guarantee

A family guarantee allows certain family members to use the equity in their home as additional security for a portion of your loan amount.
This means you may be able to buy a property sooner, avoid paying the premium for Lenders Mortgage Insurance and maximise the amount you can borrow.

First Home Owners Grant (FHOG)

The First Home Owners Grant is a one off $7000 grant paid to those who meet certain criteria when purchasing their first home.
If you qualify for the FHOG, this money can be used towards your purchase costs.  Detailed information about the FHOG for each state and territory is available from www.firsthome.gov.au
We will apply for FHOG on your behalf if you include the FHOG application with your loan application.

Eligibility requirements for the first home owner grant

Each person who owns a part of the home must be an applicant.
This includes anyone who is or will be on the title of the property with you. If you have a spouse who will not own any part of the home, you must include them on the application as a non-applicant spouse. All applicants must meet the eligibility criteria.

You may be eligible for the grant if …

You are:

  • at least 18 years of age
  • not a company or a person acting as a trustee
  • an Australian citizen or a permanent resident (or a joint applicant with someone who is an Australian citizen or permanent resident)
  • buying or building  a home worth less than $1M  (from 1 January 2010 to 30 March 2010)
  • buying or building  a home worth less than $750,000  (on or after 31 March 2010).

You may be eligible for the grant if you are a trustee of a trust (other than a discretionary or unit trust) and all the beneficiaries are individuals under a legal disability who will live in the home as their principal place of residence.

You and your spouse have:

  • never been paid the first home owner grant
  • before 1 July 2000, not owned residential property in Australia
  • from 1 July 2000, not lived in residential property (in Australia) you have owned.

You will:

  • move into the home within one year of the property being registered in your name
  • live in the home for 6 months continuously as your principal place of residence.

Exceptions

We may approve the grant in special circumstances if you:

  • are under 18 years of age
  • move into the home after one year of becoming the registered owner
  • live in the home for less than 6 months.

You may also get the grant if you have entered into a/an:

  • oral contract
  • instalment arrangement
  • rental purchase agreement.

Before applying, check with us to see if you are eligible.

 

Stamp duty waivers or concessions

Stamp duty is payable on your mortgage loan and property purchase.  Rates will vary from state to state and most states offer concessions for first home buyers.  Stamp duty calculator
Detailed information about the duty concessions for each state and territory is available from www.firsthome.gov.au
Current Information for Queensland -

Concessions for homes

Companies and trustees are not eligible to claim home/first home concessions or first home vacant land concessions, except in  specific circumstances .
Home concession
You can claim a home concession if you:

  • buy a home and move into it within one year of the date of transfer or acquisition
  • live in the home as your principal place of residence
  • do not sell, transfer, lease or otherwise grant exclusive possession of part or all of the home, or surrender the lease to another person(s) before moving in or within one year of the date you move in.

First home concession
If you have never owned a home before, you may be entitled to a ‘first home’ concession (which is greater than the home concession).
You can claim a first home concession if you:

  • buy a home and move into it within one year of the date of transfer or acquisition
  • live in the home as your principal place of residence
  • do not sell, transfer, lease or otherwise grant exclusive possession of part or all of the home, or surrender the lease to another person(s) before moving in or within one year of the date you move in
  • have never held an interest in residential land anywhere in the world
  • are at least 18 years of age (we may waive this requirement in special circumstances).

 

Disclaimer

This information was accurate at time of release. You should always check the websites to ensure that the relevant government websites to ensure that the correct and current forms are used. This information has been prepared without taking into account your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.