First Home Buyers Guide to buying off-the-plan in NSW
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.
to buying off-the-plan in NSW
INTRODUCTION Buying a home all starts before you make an offer or even sign a contract. It’s likely you’re going to have a number of questions on your mind as you begin your property search, and you should! You may wonder what you should look for in a property, how do you apply and qualify for the grants, which home loan to select and what kind of assistance is available to you. Perhaps you would like to gain a better understanding of how off-the-plan properties are sold and what exactly you can expect throughout the process.
First Home Buyers Guide to buying off-the-plan in NSW
1. CURRENT INCENTIVES There is a range of ways to receive assistance in achieving your first home goal! In NSW, the First Home Owner Grant (New Homes) (FHOG) scheme is designed to assist eligible first homeowners 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 and existing homes valued up to $650,000. The FHOG grant also applies to builders of new home where the value does not exceed $750,000. Refer to the NSW Government’s online calculator to find out how much you can save.
If you are already in a position to buy your first home, make sure you give your solicitor your completed First Home Buyers Assistance Scheme Form as not to miss out. Insurance duty on lenders’ mortgage insurance is imposed at a rate of nine per cent of the premium, however with the removal of this duty for home buyers, it will save you money if you need lenders’ mortgage insurance. You can also have up to $30,000 of super released to you to purchase property. To be eligible to have funds released you must; be over 18, intend to purchase a home within 12 months of having the funds released. For more information regarding benefits visit www.firsthome.gov.au
2. WHAT IS IMPORTANT TO YOU? 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. 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. 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.
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. THE NEW FIRST HOME LOAN DEPOSIT SCHEME The Australian Governments new First Home Loan Deposit Scheme commenced on 1 January 2020. Here is all you need to know! The First Home Loan Deposit Scheme is an initiative developed to support eligible first home buyers to purchase a home sooner. So how does it work? From January 1 and again on July 1 up to 10,000 eligible First Home Buyers will be able to purchase a property with only a 5% deposit. That means in 2020 there are 20,000 loans available throughout Australia. The initative will mean that the Government will guarantee a further 15% deposit - meaning the purchasers total deposit amount will be 20%, which will remove further costs, such as Lenders Mortgage Insurance (LMI).
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 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. Once approved for the scheme you also are required to purchase your property within 90-days*.
Property Price Thresholds: The scheme will cover only properties below the pricing threshold. These thresholds vary state to state. In NSW the pricing thresholds are: 1. NSW - Capital City: $700,000 2. NSW - Regional Centres: $700,000
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.
3. NSW - Other - $450,000
For further information on other state based pricing thresholds and further detail about the First Home Loan Deposit Scheme visit www.nhfic.gov.au
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.
*Given the ongoing COVID-19 events within Australia the Federal Government have permitted existing Deposit Scheme applicants up to 180 days to find their new property.
First Home Buyers Guide to buying off-the-plan in NSW
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!
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