Buying your first home? We'll show you how

We think buying your first home should be exciting!

Buying a new home can be a very nervous time; after all you don't do it every day. But we help people like you buy their first home and we do this everyday, we know what to look out for, how the process works, which lender will suit you best and how to set your loan up to suit you in the future.

Nearly every lender has a different rule for first home buyers; don’t waste your time – or damage your credit history – tell us your story and we will find the right lender for you.

What do you need to consider?

Should you buy the home in joint names with equal shares?

Wil you always live in the home, or do you plan to rent it out in the future? There may be options you should consider.

What can you afford?

We walk you through the whole process, in the mean time here is some more information about applying for the First Home Owners Grant - by the way we look after that for you to.

First Home Owners Grant

We automatically process your First Home Owner Grant (FHOG) for you…

If you're a first home buyer, you may get a helping hand from the Federal government, in the form of the First home owner grant, which is equivalent to a tax-free grant of up to $7,000. This grant is capped and is not available for purchases over $835,000 in value.

The total grant shown is in addition to any First Home Plus Duty exemption available to first home buyers. First Home Plus offers an exemption from duty of up to $17,990. When added to the grant payable, benefits up to $41,990 are available to first home owners in NSW.

HURRY: FIRST HOME BUYERS EXEMPTION FROM STAMP DUTY FOR ESTABLISHED HOMES IN NSW ENDS ON 31 DECEMBER 2011.  This will mean you need more savings to purchase an established home after this date.

TIP: You may be eligible for the first home owners grant even if you have previously owned vacant land or an investment property you have never lived in.

Your broker will complete all of the application forms for the first home owners grant with you, and lodge these via your lender for the fastest processing. The lender receives the grant on your behalf and makes this available to your solicitor
 
For more information on FHOG, please click on the relevant links to the left.

First Home-New Home

Commencing on 1 January 2012, the NSW First Home-New Home scheme provides exemptions or concessions on transfer duty for people who are buying their first home in NSW. This includes buying vacant land on which they intend to build their first home.

The First Home-New Home scheme provides:

• Eligible purchasers will pay no transfer duty on new homes valued up to $500,000 and will receive a discount on transfer duty for new homes valued between $500,000 and $600,000.
• Eligible purchasers buying a vacant block of residential land to build their home on will pay no duty on vacant land valued up to $300,000 and will receive a discount on duty for vacant land valued between $300,000 and $450,000.
• First Home-New Home exemptions or concessions do not apply to the purchase of an existing dwelling.

For more information about qualifying for the stamp duty concessions see the Office of State Revenue website or call the Finance Seekers.

First Home Owner Grant now up to $7,000 - plus Stamp Duty exemptions

How much you can afford to borrow?

How much you can afford to borrow towards your new home will depend on a number of factors.
For example:
• How much do you earn?
• How much do you spend each month on other commitments such as loans or living expenses?
• What are your current assets and liabilities?

Online calculators can give you a rough guide of your borrowing capacity. Your broker is in the best position to work out exactly how much you can borrow with each lender.

TIP: Different lenders have considerably different criteria when assessing how much you can borrow - ask your broker to help you select the right loan amount & the right lender.

You may decide to make a few lifestyle changes so you can buy the home you want, like bringing your own lunch to work, or cutting down on take-away coffees.

TIP: Take our 12 week savings challenge: how much can you save in 12 weeks? For just 12 weeks we want you to save every spare dollar; don't eat out, no coffee at work, don't see a movie - don't even rent a video, put all of your efforts into saving your deposit - it's a little bit of pain for a very short time - for a whole lot of gain when you buy your first home.

Other costs in buying property
When buying a house there are a number of add-on costs you need to allow for.

Some of these other costs are:
• Stamp duty and mortgage duty based on the value of the property and the state you live in.
• Legal fees and various property inspections (e.g. building, pest, strata, land/property survey) These costs will vary depending on your individual circumstances, we suggest you budget for at least $2,000.
• Land & water rates adjustments, allow approximately $1500
• Building insurance.
• Government registration charges, depending on the state you are buying in.

Another cost you may incur when buying a house is Lenders Mortgage Insurance. This is insurance your mortgage lender may require you to take out to cover them in the event that you (the borrower) default on the home loan and the property is sold for less than the outstanding amount on the home loan. Most mortgage lenders will require this insurance if you are borrowing 80 percent or more of the purchase price of the property (for Lo Doc loans insurance may be required for home loans of 60% or more). It is important to remember that Lenders Mortgage Insurance protects the lender, not you.

TIP: Ask us about minimising or avoiding Lenders Mortgage insurance with a little help from mum & dad.

The buying process:

Generally, buying a home follows this basic course of events:
1 Apply for preapproval of your home loan
2 Find the home, negotiate the price
3 Sign a copy of the contract in the real estate agent's office or your solicitor's office (preferred) & pay holding deposit . Cooling off period begins - this is called "exchange in the office"
4 Have the home inspected for pest or building issues, have the bank value the home, your solicitor will order "searches" like any environmental issues or proposals which may affect the home, any issues with council etc:
5 When full approval is received and all checks are done & satisfactory - "Exchange" contracts - balance of your deposit is due
6 Sign & return your mortgage documents, organise building and / or contents insurance
7 Generally 6 weeks later it's time to "settle" on your purchase, the home is now yours!

Paying your deposit

When you negotiate the purchase price a holding deposit is generally required to take the property off of the market until you can complete your checks. In NSW this holding deposit is 0.25% of the value of the home, and is generally not refundable.

A deposit of 10 percent of the price of the property is normally required at "Exchange" (when your loan is full approved, all of your checks and searches are done and are satisfactory) to show your intention to purchase a property. Some vendors are prepared to rest on a 5% deposit. Simply ask the real estate agent closer to the time of making an offer as to what deposit amount will be required and make sure you have it available at the time you make an offer.

If you don't have spare cash lying around for a deposit - some people don't - you may be able to use a deposit bond. Deposit bonds are issued by insurance companies and provide a guarantee to the vendor that the deposit will be paid - usually at settlement time. The cost of a deposit bond is approximately one percent of the value of the deposit. For example, you might be planning on buying a house for $300,000. A 10 percent deposit on this property would be $30,000, so the deposit bond would cost about $300. If you need to get a deposit bond, your mortgage broker will organise this for you.

Not all vendors will accept a deposit bond so you will need to check with the real estate agent whether they will accept it.

Inspecting homes

Each property you inspect will be different from the previous one. It may be in another suburb, on another street, double storey, rendered walls, or have off street parking. Trying to remember what each property had to offer and what was good and not so good about it may not be as easy as you think.
That's why it's important to go armed with a simple property inspection checklist that will help you outline what each property has and you can jot down some comments along the way. So over a period of weeks or even months you'll be able to remember what you liked and didn't like about certain properties. After each property inspection, the process of knowing what to look for and getting closer to the "right" home should become easier.

We have a handy checklist for you to take with you to record the features of the homes you inspect - download it here.

It's important that to purchase a home that will suit you now, and for a few years to come, think about the features which are important to you and your family:
• Where do you want to buy?
• What type of property do you want to buy?
• How many bedrooms do you need?
• How much time do you want to spend maintaining the property each week (gardens, lawns, cleaning etc)
• Is it near to schools / shops / public transport / parks and open areas?

Other important considerations might be:
• If buying a unit/townhouse, how many units are there in the complex?
• What is the condition of the kitchen/bathroom?
• Is there room to extend the house?
• Are there any easements running through the property? (it might prevent a swimming pool being built)
• Are the rooms big enough? (e.g. Will your king size bed fit into the bedroom and will there be enough room for a wardrobe?)
• What is the council zoning for the block? (that will impact what can and can't be done to the land and the property)

You also need to look out for signs of damage in the property:
• Are there any cracks in the walls (interior and exterior)? Cracks may indicate shifting foundations and costly work may be required.
• If it is an old house and the carpet is lifting up in places, have a look at the state of the floorboards. You may see signs of mould, white ants, borers or other problems.
• Is there a musty smell? (which may indicate rising damp or water damage)
• Check the walls on the other side of the bathroom for signs of water damage/rotting wood.
This will give you an idea of the condition of the property, however it does not replace getting it professionally inspected by a building and pest inspector.

Mortgage Application process

Your mortgage broker will take you through the mortgage application process, determining the loan and lender to suit you, gathering your documents and completing the paperwork, and applying for the loan on your behalf.
Your mortgage broker is qualified to assist you with this process and they work very hard to find the best solution & make the process simple, better still you don't have a bill from your broker - they work for you but are paid by the lender.

Terms Conditions & approval criteria apply. Stamp Duty exemptions may or may not be available, depending on which state you live in and the relevant State Government exemptions applicable at the time. Please check your state for exemption confirmation.

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