Tips for first home buyers
Last week the State
Government lifted the tax free threshold for first home
buyers to $500,000, ensuring those who secure a property
under this price will be exempt from stamp duty.
In real terms, this amounts to a saving of about $13,000
for first home buyers purchasing a home at around
$350,000, or more than $20,000 if they can afford one at
$500,000.
News of the stamp duty cuts to first home buyers has
triggered renewed interest in this section of the
market. However, first home buyers should do their
homework before leaping in.
Your starting point should be sound financial advice.
Talk to your bank, lending institution or mortgage
broker about how much you can borrow on your household
income, ensuring you still have enough at the end of
each month to live comfortably.
You need to be realistic and not expect your first home
to be your dream home. Find something that is practical
and affordable. It's better to compromise on the type
and quality of house rather than on its location.
Remember: this is your foothold into the market, you
won't live here forever. You can upgrade as the equity
in your property grows
Consider older homes and more modest villas and
apartments to keep costs down. This can also help you
with lifestyle, particularly if you want be nearer to
the city, river or beach.
Most banks will require a deposit of at least 5 per
cent, so you should start a fund for this and have
evidence of the ability to save. Buying a home at
$370,000 (the price range for most first buyers), means
that with 5 per cent deposit of around $18,000, plus the
Commonwealth First Home Buyer's Grant of $7,000, your
borrowing will be around $345,000.
On top of this you will need mortgage insurance which
will vary from between $3,000 and $6,000 depending on
your level of risk. So, your total borrowings would be
in the order of $350,000 for this example. At today's
interest rates that would mean monthly repayments of
$2,530 or around $630 per week. However, you might find
better mortgage deals with different loan companies, so
shop around.
While these stamp duty cuts will save you up to $20,000
on current prices, if Perth continues to experience 2
per cent growth per quarter, those savings will
evaporate by the end of the year. So, for those first
buyers who can afford it the next few months are a great
opportunity.
The key is to do your homework, get approval for your
finance, be realistic, know your budget and stick to it,
and when you find the right property make your first
offer a good one. Take a confident, informed step into
the property market, not a big leap.
Reiwa.com can help you with market research, repayment
calculations and finding REIWA agents in your local
area.
21 May 2007
Article added by: Communications
25 September 2006
Source: REIWA web site
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