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The first thing that most people look for in a home loan is the head line interest rate. Although this is an important consideration it is a common mistake people make when choosing a home loan. There are many other factors that can add significantly to the cost of a loan far more than interest rate alone. Loan fees and restrictive features can prevent you from paying or exiting your home or in loan early.
The deposit required for your first home will vary significantly from lender to lender. The best and quickest way to find out this information is to contact us.
There is no one set requirement for obtaining a deposit but here are the minimum requirements;
If you intend to borrow more than 90% of the properties value you will need to have a minimum of 3% genuine savings for at least 3 months. Genuine Savings is where you need to provide evidence that you have saved the deposit over a 3 month period.
If you borrow less than 90% there are some lenders that do not require that you have genuine savings but you must show evidence of a deposit.
You can use the equity in your parents home as a deposit. Known as "Family Pledge or Family Guarantee." This is where your parents or a close family member puts their home up as security in the place of a deposit.
The government has specialised savings programs for first home buyers. In a nutshell first home buyers need to open a savings account with a registered institution such as a bank, credit union and or building society. The first home buyer will receive the following benefits;
1. Bonus money from the Government. The government will contribute $170 for every $1,000 you save for each financial year up to the value of $5,000. Therefore, if you save $5,000 the government will contribute $850.
2. Interest made in the savings account will only be taxed at 15% instead of your marginal tax rate. To find out more about the First Home Saver Accounts you can visit the Australian Taxation Office Website
Below is a summary of costs you need to consider when purchasing your first home. We also have a online calculator that can help you with total property purchase costs.
Building and Pest Inspection
Cost between $200 and $500. This is essential for finding out if there are going to be additional costs after you have made the purchase. A building inspection might find out the building might needs to be electrically rewired, re-stumped or discover any structural problems which can be costly. A pest inspection may uncover pests such as termites that may have structurally impaired the building.
Home loan fees vary widely from lender to lender. A list if these is shown below;
- Establishment Fees (Entry Fees) - between $0 and $1,000
- Lenders Mortgage Insurance - between $0 and up to 4% of the purchase price. This depends on the amount borrowed and the amount borrowed against the property value.
Government Duties, Fees and Charges
This varies from state to state and it is best to contact the State Revenue Office in the state you reside or contact one of our Mortgage Experts. Here is a summary of the fees and charges you may expect to pay;
- Stamp Duty Land Transfer
- Mortgage Stamp Duty
- Land Transfer Registration Fee
- Mortgage Registration Fee
Typically these fees account between 4 and 5 percent of the purchase price; however, some first home buyers receive an exemption from most of these duties and fees and the cost is usually under $1,000.
You will most likely employ a solicitor or conveyancer to help you settle your first home. This can cost any thing from $500 to $2,000 depending on the state you reside and the type of representation.
- Moving fees
- Utility connection or transfer fees to connect the telephone, gas and electricity
- Purchasing furniture and house hold utensils
- Renovations if required
- House and contents insurance
Try our purchase costs calculator to help with calculating the costs of purchasing your first home.