First Home Buyer Guide

There are few things more exciting than getting the keys to your first home, and few things more daunting.

Just the thought of going through all your finances and deciding what to do next. At Fox Mortgages, we’ve dealt with many clients who feel the same way.

We don’t charge you to review your situation and provide you with a stress-free process. We do all the legwork. All you do is come along to the appointment with a few bits of information and you let us do the hard work.

Whether you are buying a house and land package or an established home, our role is to guide you through the process as easily and calmly as possible.

We can also help you plan, so you can avoid being blindsided by lender policies or hidden costs.

First Steps

Your first home is likely to be a stepping-stone into home ownership, not the final destination, so it is important to make the right decisions.

You’ve done your research into the kind of property you’d like and the suburb you want to live in, and how close the amenities that matter to you are, but before you go looking you need to know what you can afford.

The reality of what you can afford to buy is directly impacted by how much you have saved, your income, and your overall financial position.

How much deposit do you need?

 It’s important that you work out how much you can borrow first as your deposit will likely be an important factor in determining the price of the property you will purchase. When you know what your budget is our rule of thumb is you’ll need 20% of the purchase price plus costs. We created a helpful calculator to help you estimate the costs.

Your deposit can come from a combination of sources including genuine savings, gifts from family, and first-home buyer schemes (see below).

Some lenders may be able to lend you up to 98% of the property value, meaning that you can purchase with a smaller deposit. But in these cases, you may be hit with Lenders Mortgage Insurance (LMI), which protects the lender in case you can’t repay the loan.

Family Guarantee

Whilst the thought of saving 20% plus costs to get into your first home can seem out of reach, there is a way to secure a first home using a family guarantee. It’s a way that parents can assist their children by providing their property as additional security for the new loan.

It allows a new purchase to be free from lenders mortgage insurance and keeps the loan rate competitive.

There are many considerations when entering into a family guarantee and some lenders may require the guarantors to seek legal advice.

Borrowing Capacity

How much you can afford to repay can be calculated as the combined salary of the purchasers, minus the expenditures you need to make, such as living expenses and existing loans like car loans or credit cards.

We created a helpful calculator to help work things out approximately.

Whilst the calculator can give you an estimated borrowing capacity, it’s worth noting that there are huge variances from lender to lender in how income is assessed, especially casual income, overtime, and allowances.

Incentives

As a first-home buyer there are a range of incentives that you may qualify for. We can help find out what you can access and help you submit the applications.

First Home Owner Grant (FHOG)

The FHOG is a one-off payment to assist first-home buyers in buying or building their first home provided by the State Government of Western Australia.

The grant is currently $10,000 to buy or build a new residential property as their principal place of residence (substantially renovated properties may qualify).

It could also help with the cost of Stamp Duty.

Additional Information

Stamp Duty is a tax levied by all Australian territories and states on property purchases. The stamp duty a buyer pays can be based on the property purchase price, location, and loan purpose. Some states also charge different rates on investment properties than on places of residence. Use our Stamp Duty Calculator to find out how much this could be. 

For those that are eligible and purchasing an established house and land the ‘First Home Owner Rate’ currently provides duty concessions on purchases $430,000 or below, and a discount for purchases between $430,000 and $530,000.

First Home Buyers Assistance Account

The State Government of Western Australia also can grant of up to $2,000 to assist first-home buyers in Western Australia with some of the costs associated with their purchase. Available for purchases up to $400,000.

First Home Guarantee (FHG) 

The Federal Government launched the FHG in January 2020 with 10,000 grants being available to Australian citizens who are buying their first home in that financial year and a further 10,000 from 1st July 2020.

The scheme allows purchasers to have lenders mortgage insurance waived with just a 5% deposit through selected lenders.

Next Steps

Book a free appointment with us, and we can help set out the process as a first home buyer. We will guide you through all the costs associated with a purchase and importantly give you your borrowing capacity allowing you to understand your budget.

Pre-approval

If you haven’t chosen your home yet and want the confidence to make an offer when you find it, we can assist in getting you pre-approved for your purchase.

Make your first home dream a reality

Get in touch now to book your review with Fox Mortgages.