First Home Buyers Guide to buying off-the-plan in NSW
to buying off-the-plan in NSW
The COVID-19 pandemic has drastically changed our living environment. Both the NSW & Federal Governments have implemented new incentives to help boost our economy, create jobs and further assist First Home Buyers entering the property market. This guide outlines these new incentives.
to buying off-the-plan in NSW
INTRODUCTION 2020 has proven a challenge for many of us with our living and working environments changing as we adapt to a new way of working, socialising and home buying. The COVID-19 pandemic has impacted many aspects of our lives, however the fundamental principles of home buying remain the same. In many instances the Federal and State Governments have introduced further incentives, helping new home buyers enter the property market during during this time. The aim of this guide is to explain the home buying process, so that you can enter the market with confidence. In addition, we have also outlined recent changes to the property market and first home buyer incentives.
First Home Buyers Guide to buying off-the-plan in NSW
This guide will explain the home buying process so you can enter the market with confidence and get on with your very first home buying journey. We have outlined key steps during your purchasing journey.
1. WHAT IS IMPORTANT TO YOU?
2. CURRENT INCENTIVES
There’s an endless choice of properties on the market at the moment so it’s important to think about your lifestyle now and the lifestyle you desire in the future before starting your property hunt.
In response to the ongoing COVID-19 pandemic the NSW and Federal Governments have implemented further home buying incentives to assist First Home Buyers, and boost our economy.
Set aside some time to list the features of a home that is important to you to narrow down your search. Be as specific as you can.
These incentives include;
Are you single, a young professional couple or a growing family? This will impact the type of home you are looking for and the local amenities that will be useful to you.
2. ‘New HomeBuilder’grant of $25,000
If health and fitness are important priorities you may consider homes with high quality kitchens, located near parks or with its own gym. Young families may favour that extra bedroom and look at the proximity of the property to local schools, shops and playgrounds. In medium and high-density areas of Sydney an apartment is often the more affordable and practical option. Think of all the time saved in cleaning large houses and mowing the lawn when you can simply be enjoying quality time having a picnic at a nearby park or in the green common area of your apartment development.
1. First Home Owner Grant (New Homes) of $10,000
3. Increased Stamp Duty Exemptions & Savings 4. The New FHLDS: ‘New Homes Guarantee’ - an additional 10,000 new places enabling First Home Buyers to purchase with a 5% deposit. In addition to the above incentives you may also be eligible to access the Federal Government’s ‘First Home Super Saver Scheme’. When beginning your property search it is important to understand what incentives may be available for you. All First Home Buyer Incentives are detailed in this guide on the following pages.
UNDERSTANDING THE CURRENT AVAILABLE INCENTIVES FOR NSW FIRST HOME BUYERS THE FIRST HOME OWNER GRANT (NEW HOMES) OF $10,000 In NSW, the First Home Owner Grant (New Homes) (FHOG) scheme is designed to assist eligible first home owners to purchase their first new home with a $10,000 grant. The grant is available to buyers of new properties worth up to $600,000, while stamp duty is waived for all new homes valued up to $800,000. The FHOG grant also applies to builders of new homes where the value does not exceed $750,000. Stamp duty exemptions were increased in July 2020 from $650,000 to $800,000, saving First Home Buyers up to a possible $30,000. In addition purchases on properties priced from $800,000 and up to $1,000,000 will also have stamp duty savings on a sliding scale. Refer to the NSW Government’s online calculator to find out how much you can save.
THE NEW ‘HOMEBUILDER’ OF $25,000 Recently, the Federal Government introduced the new ‘HomeBuilder’ grant of $25,000. The New HomeBuilder incentive is applicable to all buyers that intend to reside within a new property, this includes First Home Buyers. The $25,000 grant is available to those building, or substantially renovating a new home. When purchasing a new home, you must enter a contract between 4 June 2020 and 31 December 2020. Construction must also commence within three months and the value of the home must not exceed $750,000.
THE FIRST HOME SUPER SAVER SCHEME OF $30,000 If you are a First Home Buyer you can use part of your super to help purchase your first home. The Australian Taxation Office (ATO) will release up to $30,000 plus the associated earnings from voluntary after-tax contributions or salary sacrifice payments. This is known as the First Home Super Saver Scheme (FHSS) and more information is available at www.ato. gov.au/individuals/super.
First Home Buyers Guide to buying off-the-plan in NSW
FHLDS: NEW HOME GUARANTEE From the 6 October 2020 further 10,000 First Home Loan Deposit Scheme Places Are Available for New Homes. The First Home Loan Deposit Scheme is an initiative developed to support eligible First Home Buyers to purchase a home sooner. The scheme commenced on 1 January 2020, and has been renewed under the Federal Government’s 2020/21 Budget. The new 10,000 places will support the construction of new homes and is called the ‘New Home Guarantee’ (NHG).
Income: As a single your taxable income must not be more than $125,000 in the previous financial year. As a couple your combined taxable income for the previous year must not be more than $200,000. Prior Ownership: The scheme is available only to genuine First Home Buyers, meaning you must not have previously owned a property, or an interest in property in Australia. Ownership Intention:
Under the Federal Government’s NHG scheme there have also been significant price cap increases providing First Home Buyers greater choice of their future home!
Under the scheme you must intend to move into the property within 6-months from the date of settlement, and continue to live in the property for so long as your home loan has a guarantee under the scheme.
So how does it work?
Property Price Thresholds:
From 6 October up to 10,000 eligible First Home Buyers will be able to purchase a new property with only a 5% deposit.
The scheme will only cover properties below the pricing threshold. These thresholds vary state to state. In NSW the pricing thresholds are:
The initative will mean that the Government will guarantee a further 15% deposit - meaning the purchaser’s total deposit amount will be 20%, which will remove further costs.
1. NSW - Capital City: $950,000
So, how do you know if you are eligible? There is a set criteria in order to receive one of the loan deposit scheme places. This includes criteria such as income, the property price and how you intend to use the property.
2. NSW - Regional Centres: $950,000 3. NSW - Other - $600,000 For further information on other state based pricing thresholds and further detail about the First Home Loan Deposit Scheme visit www.nhfic.gov.au
Price Thresholds for New Homes eligible under the FHLDS have increased from $700,000 to $950,000 in Sydney. Providing First Home Buyers greater choice!
3. WHAT IS YOUR BUDGET? Your bank or lending institution should be able to determine how much you are able to borrow based on your annual income and deposit amount. Working towards a 10% or 20% deposit will save you money over time. Shop around for a home loan that best suits you. Whether you are better off with a fixed or variable rate home loan depends on your lifestyle, with small variations in interest rates able to make a big difference in your monthly repayments. So do your homework! Many small and independent banks offer excellent home loans with lower fees and useful features. Websites such as finder.com.au and ratecity.com.au are a great tool for comparing features, fees and loans.
Start tracking your monthly expenses and earnings to save your deposit in an efficient way. Create a budget that incorporates the future mortgage and current lifestyle. Consider opening a high-interest savings account and become niftier with your spending habits. Simple tweaks to your daily return, including bringing your lunch to work, cutting down your take-away coffees or working out in nature, can save you over $5000 per year.
First Home Buyers Guide to buying off-the-plan in NSW
4. FINDING “HOME” Securing your property all begins with the exciting visits you make to display suites and inspections in different areas. Consider lesserknown areas near the main attractors as they are likely to be more affordable to developments likely to be more affordable than over developed areas, while offering you a quiet retreat from the busy urban grind.
Off-the-plan apartments are attractive to First Home Buyers for many reasons, mainly:
Websites such as domain.com.au , realestate.com.au and apartmentdevelopment. com.au are a great way to search the available properties in and around your desired neighbourhood. Once you’ve made your shortlist of properties, weigh up the pros and cons to help narrow down your list.
Seven years building insurance when buying new
Some cash incentives are applicable on new properties
Government grants & stamp duty exemptions
Capital growth in short-time frames
Research prices for similar properties in the area, talk to the locals, visit the area at different times to get a better feel for the local atmosphere. Plus, off-the-plan homes are brand new, so they save you the time, cost and hassle of arranging for a building inspection for structural damages as you would on existing properties. For off-the-plan apartments, securing your property is based upon visiting a display suite, completing the sales advice form with the sales agent and paying an initial holding deposit. This will remove your property from the market for 5 business days. Step two is the exchange of contracts and paying the 10% deposit (less the holding amount), within 10-14 days after exchange. The final amount is required for payment three months prior to settlement and completion.
Freedom to choose colour schemes, floor layout, views and more!
If you’d like to learn more about the current off-the-plan homes available, make an appointment with a member of our sales team by completing this form.
5. EXCHANGE A CONTRACT Remember, your final offer should be based on your market research and what you can actually afford.
The process of exchange a contract can sometimes be quite an intimidating period of your first home buying journey, however it is actually a seamless process. You will need to complete legal paperwork when purchasing your first home and a Solicitor will assist with the legal processes and act on behalf of you, so choose carefully and compare the different services and solicitor fees. The major step in the purchase of buying a home is the exchange of the written contract between yourself and the seller. Ask the real estate agent for a copy of the contract and have your solicitor review everything before you sign anything.
First Home Buyers Guide to buying off-the-plan in NSW
6. MOVE IN! After all your hard work and the completion of the new apartment development it’s time to move in! If you’ve bought an off-the-plan property, you’ll be contacted for a pre-settlement inspection and notified of the settlement once: • The building is completed, • A Certificate of Occupancy is issued, and • The titles are registered.
Then the key to your brand new property is all yours! Congratulations!
residential.colliers.com.au | 1800 685 759 | sydneyresidential@colliers.com
DISCLAIMER: Colliers International does not guarantee, warrant or represent that the information contained in this advertising and marketing document is correct. Any interested parties should make their own enquiries as to the accuracy of the information. We exclude all inferred or implied terms, conditions and warranties arising out of this document and any liability for loss or damage arising there from. COPYRIGHT: Colliers International all rights reserved. No part of this work may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying, recording, recording taping, or information retrieval systems) without the written permission of Colliers International.