The toughest part of getting into the property market for a first home buyer is getting the deposit together. Most lenders require at least 20 percent — though tightened lending practices mean some lenders require more. But there are Government incentives and other ways to get into the property market, particularly in the Newcastle area.
The Reserve Bank has kept the official cash rate at a record low of 1.5 percent, and while that doesn’t directly translate to lower interest rates on home loans, it’s still a good enough reason to see if you can get a better deal on your current loan. Here are some ways a mortgage broker can help more than your contact at your bank.
Many people think that finding the right property at the right price is the most difficult part of the process to property ownership. In fact, it’s securing the finance you need to buy the right property at the right price!
Previously, I wrote about a first home buyer on a single income, who changed mortgage brokers to get a better deal on her home loan [Single Income Family In Need of a First Home Loan?]. In that scenario, the applicant’s lender didn’t change — the broker did.
While an established property in an established suburb is never a bad investment — older suburbs tend to be in higher demand and property values appreciate faster — there are more than a few reasons why the right new home could be a better investment.
Separation Agreements Matter
With the volume of property bought and sold in Australia each week, you might assume getting a home loan is a straightforward process. Unfortunately, it’s rather complex. And not every lender approves applicants the same way, leading to some very different lending outcomes.
A mortgage broker understand what each lender is looking for and which one will suit your circumstances.
Stamp duty is a “State based” tax levied on certain transactions, including the purchase of real estate. The rate you’ll pay varies in each state and territory.
As stamp duty is a tax, you cannot borrow money to cover it, though it can accommodated for by reducing the amount of your cash deposit and increasing your home loan to cover the difference. This may mean taking out lender’s mortgage insurance (LMI) [What is Lender’s Mortgage Insurance?] to compensate for your reduced deposit.
In last year’s 2017 budget, the federal government introduced a new measure to help first-home buyers gain a foothold in the property market: The “First Home Super Saver” (FHSS) scheme, which lets individuals use up to $30,000 of voluntary superannuation contributions as a deposit.
It’s a little complicated but if it helps you get into the property market you might find it worth it. Here’s the important information.
Newcastle is the Epicentre of Growth
Sydney’s high property prices have pushed first home owners and property investors further out and increased demand on regional areas. While some people are looking to move out of the city to the Central Coast or Hunter regions, property investors are looking for the next growth area to invest in like the inner suburbs of Newcastle or low priced alternatives like Morisset and Cooranbong, where it is still close enough to commute to Sydney but house prices are low and increasing.
Renovate, update or develop
There’s an old saying about buying the worst property in the best street, and that’s doubly true for property investors. Not because you want to rent out an old slum to tenants, but because with just a few low cost modifications, you can not only increase the rental you’ll get for it, but also improve your property’s value so you can start investing again.
When you first agree to buy a property, your offer and the vendor’s acceptance of that offer is not binding until both buyer and seller have exchanged contracts, but you’re not finished until settlement occurs.
There are always technicalities during this “Cooling Off” stage so it helps to be aware of the process. It can be nerve racking for first home owners.