Stepping Into The Property Market
Are you dreaming of owning your first home or know someone who is? Good news! There are exciting government incentives and grants available to turn the dream into a reality.
At Fidelis Financial, we often hear from clients who are in the process of fine-tuning their finances and building their savings, seeking clarity on the deposit needed to purchase a house. To determine your borrowing capacity, we assess your application based on three key factors:
Funding Position: Do you have sufficient funds to use as a deposit for the proposed transaction? We will come back to this point in a moment.
Lender Policy Check: Before embarking on your journey towards homeownership, it's crucial to understand the significance of policy checks. Lenders each have their own set of guidelines and policies when it comes to approving mortgage applications. We, as your trusted mortgage experts, thoroughly assess these lender policies to match your unique scenario with a lender who is most likely to support your home buying goals. With over 30 lenders in our panel, we have the flexibility to find the right fit for you.
Serviceability Checks: Beyond having the required funds for a deposit, it's equally important to ensure that taking on a mortgage won't put you on the brink of financial hardship. Our serviceability checks aim to prove that, based on your specific financial circumstances, you can comfortably manage the loan you desire. This is a vital step to secure your financial well-being throughout your homeownership journey.
Now going back to the Funding Position. Banks are inherently risk-conscious, and they tend to be more comfortable when the loan amount is around 20% of the property's contract price. This is because they normally perceive this Loan-to-Value Ratio (LVR) as less risky. If your application exceeds 80% LVR, the bank will usually require you to pay for Lender's Mortgage Insurance (LMI), which covers the bank's costs in case you default on your mortgage and the property has to be sold at a lower value than the accepted amount. In summary, borrowing more than 80% is possible, but it comes with LMI costs passed on to you.
However, if you're a first-time homebuyer, there's an exciting option to secure a loan with a low deposit while avoiding LMI payments—the "First Home Buyer Scheme." Starting from July 2023, this scheme has been extended to permanent residents and individuals who haven't owned a house in the last 10 years, making it more accessible than ever. You can borrow up to 95% LVR without paying LMI. Contact our team to check eligibility. For those eligible for the Home Guarantee Scheme, having 5% of the purchase price in your savings account for the past 3 months fulfills the 5% genuine savings requirement.
As a first-time homebuyer, you might also qualify for other grants and incentives:
First Home Owner Grant (FHOG): The amount of this grant varies by State and depends on the final contract price. Your home's value must be within a certain threshold to qualify. For example, in South Australia, if you're purchasing or building a new residential home valued at $650,000 or less (with a contract entered into after June 15, 2023), you could be eligible for a grant of up to $15,000. The good news is that the bank will accept these funds as part of your deposit. Contact us today to discuss the FHOG applicable and the amount applicable in your State.
Stamp Duty Relief for First Home Buyers: Stamp duty exemptions differ across Australia and are determined by individual State and Territory Governments. This tax, also known as transfer duty, applies to real estate transactions. Knowing the available exemptions and concessions can reduce costs, especially for first-time homebuyers. Stamp duty regulations vary from one state or territory to another, as it's a state-level tax. Our team can assist you in identifying opportunities like stamp duty relief available in your state.
At Fidelis Financial, we're dedicated to helping you find the best mortgage solutions tailored to your unique needs. Our expert team is here to guide you through the mortgage process and ensure you make the most of these incredible incentives.
Should you have any questions or need assistance with your mortgage plans, please don't hesitate to reach out to us. We're here to support you at every step of the journey.
Don't let this opportunity slip away. Your dream of homeownership and successful investments is closer than you think, and we're here to help you turn it into a reality.