Useful Info

Now that the FHOG has increased it will cover most or all of the purchase costs (depending on how much you pay for your first home).

Most people are surprised to learn that they can borrow 100% of the purchase price (subject to valuation) of a residential property. For years their parents and friends have been urging them to save for a deposit, but it’s hard to save for a deposit and pay rent as well. The good news is that genuine no deposit loans are now available Australia wide and in most cases there is no interest rate penalty!. So now it’s much easier to get out of the rent rut and start paying off your own home instead of the landlord’s.

The great advantage of a No Deposit home loan is that you can get into your own home NOW!(taking advantage of the FHOG increase). If the market is moving ahead at 10%p.a, a $300,000 prpoerty will cost you at least $360000 in 2 years time. If it takes you 2 years to save a $20000 deposit you will be behind by $60000, plus two years rent ($25000).

First home saver accounts (FHSA) are part of the government’s election commitment to provide a simple, tax effective way to help first home buyers kick start saving for a first home. These accounts will be available from financial institutions (including banks and super funds) on 1 October 2008.

There are several incentives to open a first home saver account:

The more money you save, the more the government will contribute (up to a certain limit each year).
There’s a tax incentive to save money for your home because you don’t pay tax on any earnings on the account. Earnings on first home saver accounts are taxed at 15%, but the account provider is liable to pay it.

After each financial year, you’ll receive a government contribution based on your personal contributions during that year. When you’re ready to buy or build your first home, you withdraw the funds and close your account.

www.ato.gov.au/individuals/content.asp?doc=/Content/00155253.htm&page=1&H1

As part of the State Budget 2008 (SA), The Treasurer announced the introduction of a First Home Bonus Grant (FHBG) for first home buyers who have entered into a first home contract on or after 5 June 2008 and for owner builders who commence construction on or after 5 June 2008, subject to applicants meeting the eligibility criteria for the FHOG.

The FHBG replaces the Stamp Duty First Home Concession Scheme.

Who is eligible to receive the First Home Bonus Grant?

The FHBG is an additional payment for first home buyers who qualify to receive a First Home Owner Grant where the market value of the property does not exceed $450,000.

How much is the First Home Bonus Grant?

A FHBG of $4,000 is available for first home purchases with a market value of up to $400,000 and phases out for property with market values between $400,000 and $450,000 by $8 for every $100 in excess of $400,000.

The FHBG is in addition to the $7,000 First Home Owner Grant.

The amount of the FHBG will be determined by the market value of the property which:

in the case of a contract for the purchase of a home is the consideration for the purchase of a home, or, where that consideration is less than the market value, then the market value of the property.
in the case of a comprehensive building contract is the sum of the consideration for the building contract and the market value of the property on which the home is to be built as at the time when the contract is made, or, where the consideration for the building contract is less than the actual costs, the sum of the actual costs to build the home and the market value of the property on which the home is to be built as at the time the building contract is made.
in the case of an owner builder is the market value of the property on which the home is situated at the time the home is completed and ready for occupation as a place of residence.
Note: In the case of a farming property the market value of the property will be determined on the value of the home and curtilage area or that part of the land that is to constitute the site and curtilage of a home that is to be built on that site.

To determine the amount of the FHBG that you may be eligible for, use the First Home Bonus Calculator.

How is the market value determined ?

The Commissioner may approve or adopt any method he considers reasonable for the purposes of determining:

in the case of a contract for the purchase of the home, the market value of the home, which will in the first instance involve seeking valuation advice from the Valuer General.
in the case of a comprehensive building contract, the actual costs to build the home and the market value of the property on which the home is to be built. In relation to the market value of the property on which the home is to be built, the Commissioner will in the first instance seek valuation advice from the Valuer General.
in the case of an owner builder, the market value of the property, which will in the first instance involve seeking valuation advice from the Valuer General.
Replacement Contracts:

If you have entered into a contract for either (i) the purchase of the same home or (ii) to build the same or substantially similar home on or after 5 June 2008 that replaces a contract made prior to 5 June 2008, you will not be eligible to receive the FHBG.

How do I apply ?

if you qualify for it I am able to get all of this organised for you.

When will the FHBG be paid ?
The Addendum to claim the FHBG will be processed with the First Home Owner Grant Application and in most cases will be paid as one total payment. Should there be a query in relation to the FHBG, then this payment may be made after the First Home Owner Grant of $7,000 has been paid.

Lenders mortgage insurance is usually charged as a once-only premium, taken out at the same time as your home loan. The amount charged is dependant upon the size of the deposit and the total loan amount.
In most cases, the LMI premium is charged as an upfront lump sum, however some lenders will allow borrowers to remit the premium in instalments with the loan repayments.
LMI also attracts GST, which is included in the total premium quoted. Stamp duty may also be payable, depending on the Government regulations in the State or Territory you are applying in. Any stamp duty will also be included in the quoted premium.
There are also cases where you don’t have to pay LMI upfront but the interest rate is loaded higher.

There are a great number of expenses associated with buying a house - some up-front costs you expected, and some you probably haven’t considered. This guide explains some of these, including government fees and stamp duty, mortgage protection insurance, legal fees, inspection fees and moving costs.

Home loan costs
When you buy a house you have to pay money to a number of different people. One of the most obvious is your home loan provider – both mortgage repayments and lender fees. When choosing a home loan it’s important to look into a variety of mortgage packages and to study the fees that apply to each home loan product. Do you need a loan with lots of features (and some extra charges to boot)? Or will a basic, “no frills” product with a lower interest rate be better for your needs?

Government fees
A number of government fees will apply, including land transfer registration fees and government taxes. These fees are a mixture of flat fees and variable charges that change with the price of the property. You need to read the fee structures for your particular state carefully to make sure you understand all the charges that apply.

Stamp duty
Stamp duty rates vary from states to state and these can add a very significant cost to the property you are buying. First home owners may be eligible for a reduced rate of stamp duty in some states.

Inspection fees
There are two main forms of inspection that are recommended and between them they will cost around $700:
Building inspection - checks for structural problems
Pest inspection - ensures the house is free of pests and termites

Moving costs
Another important set of costs to consider are moving expenses, especially if you are moving a long distance. These can be quite significant, and vary considerably from company to company, so it’s worth doing your research and shopping around.

Lenders Mortgage Insurance
Lenders mortgage insurance (LMI), is a way for lenders to protect themselves if the borrower can no longer pay the mortgage and defaults on the loan. LMI is often a requirement stipulated by lenders when a borrower buys a property with less than a 20 percent deposit. The lower the deposit, the more risk the lender is exposed to and the higher the probability of default

Some other fees you may not have expected are costs such as utility connection or transfer fees, which are paid to connect the water, electricity and gas. While occasionally these may be paid for, generally you will be expected to meet these costs.

When buying a house it’s important to construct a detailed budget that takes into account all the costs you could accrue, revise it… and revise it again, to make sure you aren’t surprised by any unexpected costs.

When I bought my first house i allowed approximately 5% (inclusive of the First Home Owners Grant) of the purchase price to cover everything.

Every lender is different but as a general rule of thumb, most lenders will offer owner-occupiers up to 95% of the total purchase price. Some loans are designed to cover the full purchase price, however these loans often come with limitations, higher fees or additional conditions attached, so always remember to read the fine print.
The total amount loaned will depend on a number of variables, such as family income and expenditure.

In July 2000, the Federal Government established the First Home Owner’s Grant, designed to assist first time buyers with the cost of purchasing a home.
To be eligible for the First Home Owner’s Grant, the following criteria must be fulfilled:
The purchaser must be an Australian citizen or permanent resident buying or building their first home in Australia.
The property must be a recognised house, home unit, flat or other self-contained fixed dwelling, specifically designed for residential purposes.
The Grant must not have been claimed previously.
The home must be occupied by the applicant within twelve months of purchase settlement or building completion.
Application for the Grant must be made within twelve months of settlement or building completion.
If the home costs less than $7,000 dollars then the amount paid under the Grant will equal the purchase price.
The tax-free, one-off payment of $7,000 is not means tested, so any first home buyer who meets all the criteria is eligible. Applications made in joint names will only be entitled to one payment for the single property.
The different State and Territory Governments around Australia also have additional eligibility criteria, such as minimum age limits and periods of occupancy. All are different so check with your local authority for their specific details.

A deposit is just one cost associated with buying a house. Others include:

Loan application fees
Stamp duty
Legal costs
Insurance – including mortgage cover, home buildings and contents
Inspection fees – including building inspection, pest and termite inspections
Utility connections – water, electricity, gas, telephone
Council rates

By setting realistic goals, cutting back on unnecessary costs and keeping to a budget, saving for your first home doesn’t have to be an impossible task.

If you find that you dont have enough saved there are other options such as gifted funds and some institutions will even let you use borrowed funds (personal loans). With the new Bonus Grant of $4000 in South Australia this will help you get into your home sooner.

First and foremost you need to know how much you can borrow. Without this information your house hunting could turn out to be a big waste of time. Speak to your bank, or one of the many mortgage brokerage services that deal with an array of lenders, and seek pre-approval for your loan, so you know how much you can spend.

Have a good idea of what you are looking for including location, size, type of dwelling and price. Don’t be pressured into making a decision by the real estate agent; take your time, because it could end up being the most expensive mistake of your life.

When you finally find that perfect home, transfer of title is a necessary legal process. This can be completed through either a solicitor or conveyancing firm.