In early June, the O’Farrell Government handed down a new budget that encouraged first homebuyers in New South Wales to “think new” when entering the property market, if they wanted to benefit from the government incentives available.
Now, five months on, first home buyers often come knocking on my door enquiring about the “think new” direction for the government incentives and what it actually means for them. The overall message to first time buyers is to buy new if they wish to receive government incentives.
From 1 October this year the First Home Owner Grant, already having been named the most generous in Australia, increased from $7,000 to $15,000 on newly built or off the plan properties, with a value up to $650,000. However, this offer will drop back to only $10,000 from 1 January 2014.
Additionally, first home buyers are now exempt from stamp duty if they purchase a newly built home with a value of up to $550,000 and will receive a stamp duty concession for a newly built home valued between $550,000 and $650,000. Similarly, those who purchase a vacant block of residential land to build their home on will pay no duty on vacant land valued up to $350,000 and will receive a concession on duty for vacant land valued between $350,000 and $450,000.
Even if you are not a first homebuyer, you may be eligible for a Government grant $5,000 if you purchase a newly built or off the plan property valued up to $650,000 or vacant land that you intend to build on that has a value up to $450,000. This bonus replaces the NSW Home Builders Bonus, which provided investors and subsequent homebuyers with stamp duty exemptions or concessions for certain purchases of newly constructed property, off the plan property and vacant land on which to build.
Whilst these new incentives are great news for buyers of newly built homes or even vacant land, there is now little help in sight for the majority of the market who are looking at purchasing existing properties.
The First Home Owner Grant of $7,000 for an existing property was axed from the 1 October this year. First homebuyers purchasing existing properties post October are now also missing out on stamp duty concessions, which can be costly.
Whilst it would be a plus for first timers, the incentives available should not be the deciding factor when looking to jump into the market.
It is essential for first time buyers to do their homework and decide whether they are prepared for the commitment of home ownership. If you feel you are ready, there is no better time than the present to knuckle down and save for your deposit.
Tips to help boost your chances of a successful loan application
- Review your credit file to locate any potential credit history glitches such as unpaid bills. If there are problems, do your best to resolve them with the relevant credit provider.
- Check whether 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 this has occurred, provide supporting evidence with your loan application.
- Reduce your debt levels, such as car loans and other personal loans, credit and store cards, HECS etc as this can lower your borrowing capacity on a home loan.
- Provide 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. Some lenders take into consideration regular rental repayments as evidence of savings. Every lender’s requirements are different.
For more information contact Richard Windeyer on 1800 01 LOAN or click here to "Book a Meeting"