Common questions from first home owners

Purchasing your first property can be quite a daunting experience especially with all the questions that are running through your mind about the process. Here we have answered some of the common questions first home buyers ask us frequently.

 

What are the costs associated with purchasing a property?

Purchasing a property is very exciting and saving for a deposit in the lead up is what most people tend to focus on. You should consider that there are costs associated with purchasing that you may not have budgeted for. To make the planning a little easier we have provided you with some examples of just how much you will need before applying for your home loan.

 

Purchasing a property with 80% 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

 

In Queensland first home buyers are exempt from paying stamp duty. If you are not a first home buyer or you are in a different state where this exemption is not applicable you will need to allow an extra $3,500 for stamp duty.

 

Purchasing a property with 95% LVR

Your costs will be the same as the previous example however you will also need to pay Lenders Mortgage Insurance (LMI). Some lenders may allow you to add this onto the loan while other lenders may require you to contribute additional funds to cover this. Lenders will only lend up to 95% LVR including LMI. In this situation the LMI will be $9,706 which will mean your minimum deposit will be as follows 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?

The first home owners grant is issued by the Queensland Government to help people purchase their first home. It is important to understand what criteria is involved to know whether or not you are eligible. We have outlined the three common questions surrounding this below:

 

Am I eligible for the stamp duty exemption?

All first home owners 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?

To be eligible for the $20,000 you need to either be building or buying a new home valued at less than $750,000. The grant will not be awarded for purchases of established property. The office of state revenue define a new home as follows; A new home 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?

If any applicant has previously owned a home than the grant will not be awarded to any applicants. However, you may be eligible for 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

 

 

What is the process of purchasing with a guarantor?

Using a guarantor to purchase your first home can be a little more complicated and confusing.

When using a guarantor in lieu of a deposit the guarantors offer up a portion of their property to cover 20% of the purchase price for the new property. The applicants will need to service the entire loan amount and the guarantors may need to be able to service the loan for the 20% or the full amount depending on the loan structure and property being offered as security.

Each loan using a guarantor varies so it’s best to speak to your broker who can offer a wealth of knowledge on the subject.

 

We would love to help you own your first home! Contact us today to arrange an obligation free meeting to discuss your options. 

Posted in: First home buyers

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