Common questions from first home owners

November 24, 2017

Our Mortgage brokers know that purchasing your first property can be quite a daunting experience. You probably have so many questions running through your mind about the process. We have answered some of the most common questions first home buyers ask us frequently in this blog.

What are the costs of purchasing a property?

Finding a property to buy as your first home is exciting. And saving for a deposit is what most people tend to focus on. There are however some costs associated with purchasing a property that you may not have considered.

To make the planning a little easier we have provided you with some examples of how much you might need before applying for your home loan. However, don't let these costs deter you - our mortgage brokers can put some strategies in place, and do some negotiating on your behalf in order to reduce and even exclude you from paying these costs.

Purchasing a property with 80% Loan-Value Ratio (LVR)...

Purchase price:

$350,000

20% Deposit:

$70,000

Costs:

$3,700**

Total contribution:

$73,700


**Costs breakdown

Lender application establishment fee:

$600

Borrower Legal fee:

$1,500

Registration – Mortgage

$180

Registration – Transfer

$760

Pest Inspection fees

$250

Building Inspection Fees

$250

Other expenses

$160

If you purchase in Queensland, first home buyers are exempt from paying stamp duty. Non-first home buyers or those purchasing in another State, like New South Wales, where this exemption is not applicable, will need to allow an extra $3,500 for Stamp Duty.

Purchasing a property with 95% LVR

In this example, the costs will be the same as the tables above, however you will also be liable to pay Lenders Mortgage Insurance (LMI). Some lenders let you add this to the loan amount, while others may require you to contribute additional funds to cover LMI.

Lenders will generally only lend up to 95% LVR including LMI. So in this situation the LMI will be $9,706, which means your minimum deposit will be $28,000 (detailed below) in order to be at 95% LVR overall:

Purchase price:

$350,000

8% Deposit:

$28,000

Costs:

$3,700**

Total contribution:

$31,700

What is the first home owners grant?

In Queensland, the first home owners grant is through the Queensland Government, and is in place to assist people in purchasing their first home. There is criteria involved, and it's important to be familiar with this criteria to know whether or not you are eligible.

Here are three common questions surrounding this eligibility:

Am I eligible for the stamp duty exemption?

All first home owners in Queensland are exempt from paying stamp duty regardless of the property being purchased - up to $500,000.

Why am I not eligible for the $20,000 towards my purchase?

In order to be eligible for the $20,000 first home owners grant, you need to either buying a new home valued at less than $750,000 or be building your home. The grant is not handed over for any purchases of established property.

The definition of a 'new home' from the office of state revenue is; "a home that has not been previously occupied as a place of residence, has not been previously sold as a place of residence or is a substantially renovated home."

I have never owned a home but my partner has, can I still get the grant?

Unfortunately no. If any applicant has purchased a home previously, then the grant will not be awarded to any applicants. However, you may be able to seek an exemption on part of the stamp duty cost.

For more information on eligibility for the grant please go to the following link: https://firsthomeowners.initiatives.qld.gov.au/index.php

 

How can I purchase with a guarantor?

Using a guarantor to purchase a property can be a fantastic way for your family to assist you in realising your home ownership goals.

A guarantor can be used in place of a deposit, through your guarantor offering portion of their property equity to cover 20% of the purchase price for your desired property. Applicants need to be able to manage repayments, and service the entire loan amount. The guarantors may also need to be able to service the loan for either the 20%, or they may need to be able to service the full amount. This depends on the loan structure and on the property that's being offered as security by the guarantors.

Using a guarantor varies from loan to loan, so it’s best to speak to your local mortgage brokers in Kingscliff about the details. We can offer a wealth of knowledge on the subject as we've dealt with many guarantor situations.

 

Speak to your local mortgage broking team servicing Kingscliff, Coolangatta, Murwillumbah and the surrounding areas. 

Contact us today on 0425 293 453 or click 'Book an Appointment' on our Homepage to arrange an obligation-free meeting to discuss your options. Our home loan service is always free of charge.

Posted in: First home buyers

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