Buying your first home is an exciting time, but it can get overwhelming when you start thinking about what you’ll need to have in place before you can start looking. It’s always a good time to buy Point Cook real estate, so let’s take a look at what you need to know when it comes to finances and buying property.

Saving a deposit

Having a substantial deposit will make it easier for you to purchase your new home, but how much do you really need to save?

A 20% deposit used to be the standard minimum that you would need to have saved before purchasing, but many are buying with much less of a deposit. In general, a lender will need to see 5% in genuine savings, but your individual circumstances may require you to have more.

Now while that 5% deposit equates to a smaller amount you need to have saved, you will need to take into consideration any Lenders Mortgage Insurance (LMI) you will need to have included in your loan amount. The lower the deposit, the more LMI will be added to your loan.

So what does this 5% equate to?

The median house price in Point Cook is $745,000. This means you will need $37,250 as a 5% deposit. For a unit, the median price is $500,000 which equates to a $25,000 deposit. Perhaps not as much as you thought you might need?

There are some other costs on top of the deposit that you may need to save for however, including:

  • Stamp duty
  • Conveyancing and legal fees
  • Building and pest inspection
  • Mortgage registration fees
  • Transfer fees
  • Loan application fees

Even if you aren’t ready to buy, it is well worth sitting down with a broker or your bank and working out roughly how much you could expect to pay when purchasing a home, and how much you can borrow. This will set you up to start looking for a property with more certainty.

Grants, exemptions, concessions and reductions

As a first home buyer, you may have access to a number of grants, exemptions, concessions and reductions.

  • The first one to look at is the First Home Owners Grant (FOHG). If you are buying or building a new home valued up to $750,000, you may be eligible for the FOHG of $10,000. To be eligible, the property must not have been previously sold or occupied.
  • The first-home buyer duty exemption or concession is a one-off exemption when purchasing your principal place of residence (PPOR) that is valued up to $600,000 or a concession for a PPOR valued from $600,001 to $750,000. This is a reduction in the amount of land transfer duty that you need to pay.
  • The first-home buyer reduction is a one-off duty reduction of up to 50% for a PPOR valued up to $600,000.
  • The off-the-plan concession is a duty concession for an off-the-plan property, either as a land and build package or a refurbished lot.
  • The pensioner concession is a one-off duty exemption or concession for a new or established home to the value of $750,000.
  • The PPOR concession is a duty concession for when a property you buy is intended as your primary home, up to the value of $550,000.
  • The first-home owner with family exemption or concession is a one-off duty exemption or concession for properties valued at $200,000 or less.

You can find out more about these concessions and exemptions from the State Revenue Office.

What is stamp duty?

Stamp duty is a government tax that is applied to certain transactions – car purchases, insurance policies and real estate are the main ones we pay. On property, it is also known as a land transfer tax.

The stamp duty is paid within 30 days of settlement, and your solicitor or conveyancer will usually organise to pay this on your behalf. It is important to be aware of how much this tax will be, as you cannot include this in the loan amount.

In Victoria, the following rates apply:

$0 – $25,000                            1.4% of the dutiable value of the property
> $25,000 – $130,000           $350 plus 2.4% of the dutiable value in excess of $25,000
> $130,000 – $960,000        $2870 plus 6% of the dutiable value in excess of $130,000
>$960,000 – $2,000,000     5.5% of the dutiable value
More than $2,000,000           $110,000 plus 6.5% of the dutiable value in excess of $2,000,000

As we mentioned earlier, there are some exemptions and concessions for first home buyers, so it is really worth sitting down with your broker or conveyancer to work out the additional cost and what exemptions or concessions you are entitled to.

Talk to us – no one knows the West better!

Are you thinking of buying Point Cook real estate? Established Property is the best real estate agency in Point Cook and surrounds, and we are always happy to help first home buyers get into the market. Get in touch and let’s see how we can help.