Bell Finance Partners Guide for First Home Buyers
Owning a home remains the great Australian dream and the experts at Bell Partners Finance are highly experienced in assisting people wanting to get into the property market for the first time.
Our team of brokers can guide first-time buyers through the home ownership process including all the information on obtaining a home loan and the range of assistance schemes offered by state and federal governments to enable people to achieve their property dreams.
Assistance for first-time homebuyers
First Home Buyer Choice
In NSW, first-home buyers can choose between an annual property fee or an upfront stamp duty payment.
The First Home Buyer Choice scheme lets those buying their first property opt out of paying stamp duty upfront in exchange for a smaller annual tax. The scheme aims at reducing the cost of entering the property market by removing stamp duty – which can be a massive extra expense on top of the cost of a house. First-home buyers can elect to pay an annual property tax of $400 plus 0.3% of the land’s value instead of a lump sum stamp duty payment.
For example, someone buying a first home for $830,000 with a land value of $265,000 can choose between upfront stamp duty of $32,440 or an initial annual property tax of $1,195. The land is not locked into the property tax forever. If the property is sold, it is not locked into the property tax for subsequent owners.
To be eligible for the scheme, you have to be a first-time buyer, aged 18 or over and an Australian citizen or permanent resident. The home has to be purchased for $1.5 million or less and you have to move into the property within the first year and live in it for at least six months.
Remember, stamp duty is a state-based tax, and each state offers its own concessions to first-home buyers. You should check the current grants and exemptions in your state to see what benefits are currently available and the eligibility criteria.
First Home Guarantee
The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), a federal government initiative to support eligible first-home buyers purchasing a home sooner. It is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the federal government.
Under the FHBG, part of an eligible first home buyer’s home loan from a participating lender is guaranteed by NHFIC. This enables an eligible home buyer to purchase a home with as little as a 5% deposit without paying Lenders’ Mortgage Insurance.
Any guarantee of a home loan is for up to a maximum amount of 15% of the value of the property (as assessed by the participating lender). This guarantee is not a cash payment or a deposit for a home loan.
First Home Buyers’ Grant
The First Home Buyers’ Grant was launched back in July 2000, just before the Sydney Olympics. It was designed to offset the introduction of the GST.
Across Australia, the First Home Buyers’ Grant provides a one-off lump sum payment. The grant is funded separately by each of the states and territories. How much you may receive and the conditions for eligibility will vary around the country. It is generally only available if you buy or build a new home. In some states and territories, you may also be eligible if you purchase a substantially renovated home. In NSW, the grant is worth $10,000.
First Home Super Saver Scheme
First-home buyers may also be eligible for the FHSSS, which allows you to make voluntary (before tax) contributions to your super fund that you can withdraw to use as a home deposit. At present, you can make contributions of up to $15,000 per financial year, subject to your normal super contribution caps.
Obtaining a home loan for a first-time buyer
The timeline for obtaining a home loan as a first home buyer can vary depending on the type of loan and the lender. However, on average it can take anywhere from 15 to 30 business days. The process typically involves a credit check, a valuation of the property, and a credit assessment process to determine your eligibility and the terms of the new loan.
As with anyone looking to purchase a property, we highly encourage first-home buyers to get finance pre-approval before looking to purchase. This allows first-home buyers to know their budget and maximum purchase price before finding a property.
First home buyer’s home loans
Some lenders offer first-home buyers home loans that are specifically designed for individuals and families who are looking to purchase their first home in Australia. These loans generally have more favourable terms and lower interest rates compared to traditional home loans. They are intended to make the home buying process more accessible for first-time buyers by providing more favourable terms and more flexible lending options.
What other types of home loans are available?
These loans have an interest rate that remains the same for a set period, usually 1 to 5 years. This allows for certainly around monthly payments for the fixed term. At the expiry of the initial fixed-rate term, borrowers can choose to either re-fix their interest rate at the current fixed interest rate at that time or roll it onto the current variable rate offered.
Variable rate loans:
These loans have an interest rate that can change over time. This can lead to lower initial interest rates compared to a fixed-rate loan, but it can also lead to unpredictable monthly payments. A loan can also be split with both a fixed rate and a variable rate.
Home loan repayment types
Principal and interest home loans:
A home loan with principal and interest (or P&I) repayments is one where you pay back the money you borrowed from the lender – also referred to as the ‘principal’ of the loan – at the same time as you pay off the interest your lender charges you. This means the amount you repay each week, fortnight or month is likely to remain fairly stable throughout your loan, unless your lender changes your interest rate or ongoing fees.
Interest-only home loans:
Interest-only (IO) home loans are loans in which only the interest portion is paid off, not the principal, for the first one to five years of a loan, before the loan reverts to P&I repayments. As a result, your repayments may be cheaper initially but are likely to go up substantially once you start paying off the principal component. In Australia, this type of loan is generally more suited to property investors than people buying a home to live in, although it may also be attractive to people who want cheaper initial repayments on their first home.
Why Choose Bell Partners Finance?
At Bell Partners Finance, we are committed to providing our clients with the best loan options, excellent customer service and industry expertise. We have a team of experts that are familiar with the various government schemes and regulations across Australia. Our team of mortgage brokers will guide you through the process, answer any questions you may have and help you to find the best home loan option for you.
Choosing Bell Partners Finance means choosing a team of experts who are dedicated to finding the best loan options for you, making the home-buying process as stress-free as possible, and providing excellent customer service across Australia. Contact us today to learn more about how we can help you navigate purchasing your first home.