First Home Buyer? Here's What You Need to Know

Buying your first home is a really exciting step but it can also be pretty overwhelming.

Our first home buyer clients naturally have lots of questions and that's where we come in - we hold your hand each step of the way.

We explain things in language you understand and educate you on the buying process to alleviate that stress and overwhelm you'll more than likely feel.

Here's some of the key things to know if you're considering buying your first home:

COSTS TO ALLOW FOR

When buying property, you not only need to allow for the actual cost of the property, but a number of fees and buying costs.

Generally speaking you'll need to allow for 5%+ of the property's purchase price to also afford these additional buying costs.

Government Costs:

- Purchase Stamp Duty

Property transfer stamp duty is a state government tax payable by the buyer and is calculated on the price paid for the property. First home buyers may be eligible for significant rebates on stamp duty.

- Property Transfer Fee

This is a state government charge to register the transfer of title of the property from one person to another.

- Mortgage Registration Fee

This is an administrative charge imposed by the Land Titles Office. This fee is charged for entering (registering) the lender’s mortgage on to the title record for the property.

The fee is approximately $197 as at 2021.

Lender Fees:

To start the process of obtaining a loan, the borrower may have to pay an application or loan establishment fee. The cost can vary depending on loan type, lender, security and loan splits. In most cases, the fee includes the cost of the first valuation.

Lender’s Mortgage Insurance (LMI) insures the lender against any loss incurred if the borrower defaults and the net proceeds of an enforced sale of the security property are insufficient to clear the debt. Note that Lender’s Mortgage Insurance covers the lender, not the borrower.

LMI may be added to your final home loan amount (depending on the lender.) It should not be confused with Mortgage Protection Insurance, which covers the mortgage repayment for the borrower in the event of death, disability, illness or involuntary unemployment etc.

GRANTS YOU MIGHT QUALIFY FOR

The great news about buying your first home, is that there's numerous Grants and assistance available, that you may be eligible for, including:

First Home Owners Grant

The First Home Owner Grant is a lump sum of cash available to first home owners to help with the cost of buying a first home or vacant land to build a home on. The Grant doesn’t have to be repaid, and it’s not taxable, but there are strings attached.

As at Oct 21, this is $15,000 in Queensland.

Stamp Duty Exemption

You may also be eligible for a waiver of stamp duty, which could save you tens of thousands of dollars.

There are restrictions, so it's best to check with us, before you sign a contract to purchase.

IS HAVING A GUARANTOR AN OPTION?

Saving a decent home-buying deposit can be difficult… especially if you’re renting. But there is a solution that could get you over the line sooner - having a ‘guarantor’.

A guarantor on a mortgage is the person who provides the additional security for your home loan. Most lenders prefer the guarantor to be a close relative – usually a parent, grandparent or siblings.

Your guarantor doesn’t need to provide any cash payment. No money changes hands with a guarantee.

Some lenders will allow extended family members and even ex-spouses to be a guarantor for your loan. This varies depending on the lender.

The guarantor agrees to offer part of their home equity to top up your cash deposit. In this way, a guarantor home loan can let first home buyers buy a place of their own far sooner.

THE HOME BUYING PROCESS

Once you and your Mortgage Choice broker have chosen a home loan that’s right for you, it’s time to submit an application. The process varies between lenders, but we’ve provided a general order of events below.

Step #1: Meet with a Mortgage Broker
Step #2: Prepare the application
Step #3: Conditional approval
Step #4: Unconditional approval
Step #5: Complete loan documents
Step #6: Loan settlement
Step #7: Home loan completion

HOW WE HELP

In a nutshell - we hold your hand from start to finish.

We support you and answer all the questions you're going to have

Explain the costs & process

Your broker can explain all the costs and steps involved in buying a home and give you a realistic picture of what you can borrow.

Apply for incentives

In Australia, there are a number of government incentives available to first home buyers. We’ll let you know whether you’re eligible for assistance schemes such as the First Home Owners Grant (FHOG) and help with the paperwork.

Help you get pre-approval

If you haven’t yet found the right home, your broker could help to organise pre-approval so you can shop for your new home with confidence, knowing exactly what you can afford.

Support you all the way to your first home

When you’re ready to move ahead with your first home loan, your broker will prepare all the paperwork and support you at every step to settlement.

If you're a first home buyer, book a free 10 minute call with us today to talk about how we can help you: https://bit.ly/MCBuderimappt