May 04, 2012
Considering taking steps towards property ownership? The combination of stamp duty concessions and grants, a minimum 5% deposit and a well thought-out savings plan could help unlock your property ownership goals sooner.
First homebuyers seeking a foothold in property may be eligible for benefits under the First Home Owner Grant and the First Home Saver Account could provide a further savings stepping stone.
The First Home Owner Grant Scheme, funded by the NSW Government and administered by the Office of State Revenue (OSR), gives eligible first homebuyers $7,000 towards the purchase of their first home regardless of their income or the area in which they plan to buy or build. At least one applicant must occupy the home as their principal place of residence for a continuous period of six months, starting within 12 months of settlement or the home’s construction. There is also a cap on the value of homes that can be purchased using the grant. In New South Wales, the cap is $835,000 and this cap is reviewed each year.
Organise your paperwork before you apply for a home loan
To assess your ability to borrow, lenders will require information about your financial history and your current financial position. They will also require evidence of consistent employment, along with documentation that details your income, living expenses, assets and liabilities, such as credit card debt and other loans. If you have any questionable elements in your credit record, ensure you make every effort to resolve them before taking steps to apply for a loan.
How to boost your chances of a successful loan application
Having a home loan application rejected can be frustrating and time consuming. However, there are a number of ways to prepare your paperwork for approval that can save you time and hassle.
- Review your credit file - Locate any potential credit history glitches such as unpaid bills and rejected loan applications. If there are any grey areas, do your best to resolve them with the relevant credit provider before making a home loan application.
- Ensure your financial statements add up - Are your financial statements are free from unusual withdrawals or transfers, such as the transfer of large sums of money to/from your account/s? If anything appears unusual, gather supporting evidence that you can supply with your loan application.
- Reduce outstanding debt levels - Have loan debts, such as car loans, personal loans, credit and store cards, HECS, etc? Did you know that a $10,000 credit card debt could lower your borrowing capacity on a home loan by around $40,000? Do your best to eliminate or reduce credit card or other debts now rather than further down the track.
- Prepare evidence of consistent employment and savings - Lenders want to see a consistent employment record and evidence of genuine savings for a period of at least three months and in some instances up to six months. Some lenders may take into consideration regular rental repayments as evidence of savings. Every lender’s requirements are different.
A professional mortgage broker can provide you with the most up-to-date information.
Not in a position to buy today?
If you’re not in a position to buy today, but you are taking steps towards home ownership in the coming years, it may be worth considering the pros and cons of the Federal Government’s First Home Saver Account. The FHSA provides a tax-effective way of saving for your first home through a combination of government contributions and low taxes. These accounts attract a lower rate of tax on the interest earned and each financial year a government contribution calculated on your personal contributions will be deposited. You can still claim Federal and state first homebuyer incentives, but you must contribute at least $1,000 per year to your account in four financial years before you withdraw the funds to buy or build a home.
For more information contact Richard Windeyer on 1800 01 LOAN or click here to "Book a Meeting"