Home Loan Advice Centre guides you through the entire home buying journey, without charging you for our service. Click here for our 5 minute online enquiry page . We’ll assess your loan options and send you a full report of your capacity.
The amount you can borrow is affected by your income, your deposit, and bank’s serviceabilty criteria which is linked to interest rates, cost of living, and your existing liabilities etc. See our Borrowing Power calculator for a rough estimate.
Home Loan Advice Centre helps borrowers Australia-wide. We specialise in Sydney and NSW and regularly help clients in remote areas and other states. Feel free to contact us on 02-9210-1000 or 1300-729-177 to see how we can help you.
Buying your First Home
Buying your first home should be an exciting and satisfying experience and with a little knowledge and preparation there is no reason why it shouldn’t be. There are a number of things to be aware of ranging from the various government benefits for first home buyers to understanding the requirements the various lenders place on you before they will give you a loan.
Government grants and stamp duty exemptions can save you up to nearly $40,000.00 off the cost of your new property in some states. So clearly these benefits are worthwhile if you’re eligible!.
First home buyers get 2 main benefits … a cash grant called the first home owner’s grant and an exemption of stamp duty costs associated with the purchase of a property.
The First Home Owners Grant
Each state has different qualification rules and pay different grant amounts. The grant varies from $5,000 in some states to $20,000 in others. In NSW, first home buyers purchasing a brand new first home will receive $10,000 first home owners grant for purchases up to a cost price of $650,000 or up to $750,000 if you are building a property. The property you purchase must be “brand new” to qualify for the first home owners grant. See first home grant and stamp duties page for more information.
To be eligible for the First Home Owners Grant you must be an Australian citizen or permanent resident and you (and your spouse / partner) must have not previously owned a “home” in Australia. If there are 2 applicants, at least one applicant needs to be an Australian citizen or permanent resident to qualify. All states require the property to be a “brand new unlived-in property”.
Generally you are required to live in the property for a period of at least 6 consecutive months commencing within the first 12 months after purchase. (rules differ by state) Therefore, there is some flexibility in complying with this legislation and you still may qualify if you decide not to live in the property straight away or alternatively live in it for six or more months and then rent it out following that.
Stamp Duty Exemptions
Whenever a property transaction occurs, the state governments usually charge a stamp duty cost as a percentage of the cost price (it’s around the 4% mark in most states). If you meet the state rules as a first home buyer, most states will offer you a substantial reduction in the stamp duty amount payable. The discount given is dependent on the cost price of the property and other factors. For qualifying first home buyers in NSW for example, no stamp duty is payable for first home purchases up to $650,000. Some states don’t offer any discount if the property being purchased is not brand new but other states are less stringent and also offer discounts on established property purchases.. See first home grant and stamp duties page for more information
Eligible applicants must be an Australian citizen or permanent resident and you (and your spouse / partner) must have not previously owned a home in Australia. Once the property cost exceeds a certain price threshold (less for vacant land), the exemptions offered by the state governments start to drop. These rules and exemptions change frequently so please call Home Loan Advice Centre on 02-9210-1000 for more information.
The maximum loan possible to assist with your purchase is generally limited to 95% of the value of the property plus a mortgage insurance premium (which usually is capitalised onto the loan) taking the total borrowing up a level about 97%-98% of the cost price or more. The amount of deposit you need to provide is dependent on the loan %, whether or not you get any first home buyers grant, and whether you have any stamp duty cost. It differs for different buyer’s circumstances, for different cost prices, whether you purchase a brand new or established property, and which state you purchase in. Our free home loan assessment works all this out for you.
As an example, the approximate deposit amounts required for $500,000 first home purchase might be as low as $13,000 in some states. See sample loan report
Note that various lenders may also have rules requiring you show a capacity to save up to 5% of the cost price via a 3 month savings record. This is called genuine savings and the requirement is on a case-by-case basis and dependent on your final required loan to value ratio.
Your capacity to borrow money from the various lenders is determined mainly by your income, your personal situation (married, single, children vs no children, debt levels, and each individual lender’s serviceability calculations.
Your repayments will depend on your final loan amount, your interest rate, and your choice of repayment type (principle and interest or interest-only)