There is a lot of negative press about housing affordability in Melbourne and what this means for first home buyers. In fact, first home buyers made up around a third of owner-occupier mortgages issued in August this year – the largest percentage since early 2012. Source: ABS.
With interest rates at record lows, the easing of lending conditions and reduced competition from investors, first home buyers are currently at an advantage, despite the recent recovery in house prices.
There are a number of incentives and concessions available to first home buyers in Melbourne.
The First Home Owner Grant
Issued by: The State Revenue Office
Am I Eligible? You can check this by using the SRO’s online tool. At a minimum, you cannot have received the grant before, must be the sole purchaser and intend to live in the property for at least 12 months. Most importantly, the home must be less than five years old to be eligible.
Stamp Duty Reduction
Issued by: The State Revenue Office
Am I Eligible? All purchasers of the property must meet the First Home Owner Grant eligibility criteria, however, unlike the First Home Owner Grant, it doesn’t matter whether you buy a new or established home.
Your contract of sale must have been entered into on or after 1 July 2017. The concession is applied on a sliding scale to properties with a dutiable value up to $750,000.
First Home Super Saver Scheme
This scheme has been released to help Australians boost their savings for a first home by allowing them to build a deposit inside superannuation, giving them a tax cut.
The FHSSS applies to voluntary superannuation contributions made from 1 July 2017. For most people, the FHSSS could boost the savings they can put towards a deposit by at least 30 per cent, compared with saving through a standard deposit account.
Issued by: The Department of Treasury
Am I Eligible? You can release funds under the FHSSS if you are 18 or over, have not used the FHSSS before, and have never owned real property in Australia. You will be eligible if you meet all eligibility criteria, even if you plan to purchase with a partner who does not meet the criteria.
First Home Loan Deposit Scheme
The idea behind the scheme is to allow first home buyers with a 5% deposit get a home loan without lender’s mortgage insurance. The government will guarantee the remaining 15% of the deposit.
Issued By: The Federal Government’s National Housing Finance and Investment Corporation
Am I Eligible? Places are limited to 10,000 per year nationally and the value of eligible homes varies by state and region. For full details and information on who can apply, go to the fact sheet on the NHFIC website: www.nhfic.gov.au
The cost of buying a new home is more than just your deposit. You should also factor in stamp duty if your home is valued over $600,000 (concessional rates apply for properties valued between $600K and $750K).
In addition, you will need to pay Mortgage Lender’ Insurance, conveyancer’s fees, and for a building and pest inspection. Some buyers also choose to engage a buyer’s agent.
A buyer’s agent is a property professional who specialises in advocating for the buyer in a property transaction. They can guide the buyer through the process of buying a property, and conduct the property search, assessment of values and price negotiations.
A buyer’s agent can be a invaluable weapon in Melbourne’s competitive property market.
Agents work on either a fixed fee model or a commission model. The amount will vary depending on the level of service provided, while some agents will also have tiered fee structures based on the purchase price of your property.
You also need to factor in moving costs, adequate home and contents insurance, and any repairs and renovations required.
The Victorian Government has a suite of online resources for first home buyers, which cover advice on saving for a deposit, choosing a property and what to do before you sign a contract – https://www.vic.gov.au/first-home-buyer-guide
If you have already found a great property and you’re keen to make an offer, call The Hub on 1300 071 283 or request a free quote on a pre-purchase house and pest inspection. Our qualified and independent inspectors are on hand to guide you through the purchase process.