The new financial year has kicked off with a bang for first home buyers! A whopping 45,000 more places have opened up for them under the Home Guarantee Scheme, as well as 5,000 more spots for single parents. Here’s how it could help you buy a home sooner.
Home ownership has long been the great Australian dream, but high property prices are making it tough to save a 20% deposit for many young families.
That’s where the federal government’s Home Guarantee Scheme (HGS) comes in.
It gives first home buyers a leg up into the property market even if they have just a 5% deposit, and it’s proving to be very popular.
In fact, it’s helped more than 160,000 Australians buy or build their own home since the scheme launched four years ago.
Places in the HGS are capped each year, but the good news is that an extra 50,000 spots have just been announced for the 2024-25 financial year.
Not sure what the scheme is about?
Let’s take a closer look at what’s involved by answering a few FAQs.
The HGS helps first home buyers and single parents buy a place of their own even when they have a small deposit.
Essentially, the government acts as a guarantor for the home buyer’s loan, so there is no need to pay lenders mortgage insurance, which can be a big saving on upfront costs.
In fact, not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
The HGS covers three separate programs, each with a different type of home buyer in mind.
The First Home Guarantee helps eligible first home buyers get into the market with as little as a 5% deposit. From 1 July 2024, an extra 35,000 places became available.
The Regional First Home Buyer Guarantee is dedicated to helping first home buyers who live in regional areas buy a home with just a 5% deposit. An extra 10,000 places have opened up for the 2024-25 financial year.
The Family Home Guarantee supports eligible single parents to buy a home with as little as a 2% deposit. This will help up to 5,000 families this financial year.
You’ll need to tick a few boxes to be eligible for the HGS.
In particular, there are limits around the maximum purchase price for a home under the scheme. The upper limits vary between cities and across regional areas from state to state, and are adjusted each financial year.
One way to find out if you’re eligible is to call us and we can walk you through the various requirements.
No. Lenders choose to be part of the HGS, and while there is a reasonably wide choice of banks to pick from, not all lenders have signed up.
The Real Estate Institute of Australia says the “best way to see if you can qualify for the scheme and seek pre-approval is to speak with a mortgage broker”.
To date, mortgage brokers have secured up to 80% of the HGS placements, and we can guide you through the application process, answer any questions you may have about buying a first home, and recommend a home loan option suited to your needs from the lenders that are part of the scheme.
Call us today to find out more about buying with a 5% deposit – and zero lenders mortgage insurance. You could be in your own home a lot sooner than you expected!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Property prices are expected to keep climbing higher through to mid-2025 – though not everywhere, according to a new report. We reveal where prices are tipped to go up, and where prices are expected to fall.
What a crazy financial year it’s been for property prices.
Despite a cost of living crunch and high interest rates, home values Australia-wide have soared 8.3% over the past 12 months, according to CoreLogic.
Will prices keep heading north? Or can we expect the market to cool at some stage?
These are key questions for home buyers who may be weighing up whether now is the right time to buy.
To get some answers, we turned to Domain’s latest forecast report, which sets out expected property price movements over the next 12 months.
According to Domain, several factors are set to push Australian home prices higher over the next year.
On one hand, we’re seeing a tight supply of new homes being built, combined with lower than usual numbers of homes listed for sale.
On the other side of the ledger, strong buyer demand is being fuelled by a growth in migration.
As Domain puts it, the “push-pull between affordability and availability” will be the factor that shapes Australia’s property market between now and June 2025.
That’s not to say home prices across Australia will move in the same direction and at the same pace.
Let’s take a quick tour around the nation to see what Domain believes lies in store for home buyers (and apologies to Hobart and Darwin residents – neither city was covered in the released report).
Brisbane’s property market has notched up an impressive 16.3% price growth over the past year. And Domain says there’s more growth to come.
With a forecast for 6-8% price growth, Brisbane’s median house price could hit a record high of up to $998,500 by mid-2025. Apartment values are expected to increase by 4-6%.
If Domain’s prediction of 6-8% price growth proves accurate, Sydney’s median house price will hit a new record high of up to $1.76 million by this time next year.
Apartment prices (median) are also expected to reach a new record of up to $855,000 based on forecast price growth of 4-6%.
Melbourne’s housing market is expected to remain a little cooler, with growth between 0-2% expected – leaving median house prices between $1.03 million and $1.05 million. Unit prices are expected to do better, potentially rising by up to 4%.
Regional Victoria is the only market where Domain expects house prices to cool, with falls of 0-3% expected by mid-2025.
Adelaide could be on track to become a million-dollar city if Domain’s forecast of 7-8% price growth pans out. It could see Adelaide’s median house price hit a record high of up to $984,000 by June 2025.
Unit prices are anticipated to grow by up to 6%, helping the city’s median apartment price push through the $500,000 barrier.
There’s no denying Perth has had a bumper year, with a 22% jump in home prices over the past 12 months. And according to Domain there’s plenty of gas left in the tank.
With price growth of 8-10% possible over the year ahead, Perth could notch up a record-high median house price of between $840,000 and $856,000 by this time next year. In the unit market, prices are expected to jump 4-5%.
Canberrans can expect mild house price growth, with values forecast to climb by up to 4%.
Unit prices in the nation’s capital are expected to increase by 1-4%.
Domain’s forecasts are just that – predictions, not facts.
Along with factors that could push prices higher, the property listing site also cautions that a tighter jobs market and stagnating incomes could put downward pressure on prices.
Long story short: the right time to buy is when you feel ready to get into the market.
We can’t say for sure how property prices will move.
But we can provide clear answers on your borrowing power, help you understand if you’re in a position to land home approval, and help you find a home loan that’s right for your needs.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Put the party pies on ice and postpone those rate-cut celebrations for a while yet. The much-touted rate cuts we’ve been waiting for may not arrive until 2025. Here’s why rates could be staying higher for longer, and how to take action yourself.
June saw the Reserve Bank of Australia (RBA) keep the cash rate on ice – yet again.
Rates haven’t budged since November last year, and with the RBA not due to make another rate call until August, interest rates will remain in a holding pattern for at least two more months.
For home owners struggling to manage their home loan at current interest rates, it begs the question: ‘what happened to all the talk about rate cuts in 2024?’
Here’s what’s happening.
Just a few months ago, some of our biggest banks were predicting interest rates would start to slide sooner rather than later.
The Commonwealth Bank and Westpac, for instance, expected rate cuts as early as September.
That’s now looking increasingly unlikely.
The reason lies with inflation.
The RBA is intent on getting inflation down to 2-3%.
Unfortunately, inflation is not playing along.
It’s currently sitting at 3.6%. So close, but not quite there.
The RBA expects it could be “some time yet” before inflation is happily nestled in that 2-3% range – the point at which long-awaited rate cuts may start to kick in.
It’s not much of a date for home owners to work towards, though the big banks have a few time frames of their own.
Westpac and NAB now both see rates heading south from December. And while CommBank recently stated it expected rates to fall in November, there are signs it’s losing hope for a 2024 rate cut.
“Given the challenging underlying inflation backdrop, as well as a labour market that is loosening more gradually than expected, the runway is shortening between now and November,” CBA’s head of Australian economics, Gareth Aird, said.
“The risk to our call is increasingly moving towards a later day for an easing cycle.”
Meanwhile, ANZ doesn’t expect a rate cut before 2025. Ditto Citi economists and a growing number of other experts.
Long story short, even if we do get a December 2024 RBA rate cut, it’s probably fair to say we won’t see those cuts flow through to home loans until early next year.
And a note of caution: the RBA mentioned in its June statement that it is “not ruling anything in or out”.
It’s a grim reminder that a rate cut is not guaranteed before another rate hike.
This is why it’s so important to take action of your own.
Revisiting your household budget, identifying areas where you can cut back, and tucking spare cash into an offset account to save on loan interest are all steps worth considering.
And don’t forget, tax cuts for 13.6 million Australians kick in from 1 July.
That could provide extra cash each pay day to help pay off your home loan.
It’s also a good idea to speak to us for a home loan review.
We can let you know if you still have the loan that’s right for your needs, or if you could save by switching – without having to wait for RBA rate cuts.
Better still, rising national property values may mean you could be in a great position to refinance.
Talk to us today for more tips on managing your home loan repayments and possibly trimming your loan rate. It may mean the party pies can come out sooner!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.
The classic tune ‘Home among the gum trees’ is fast becoming a lifestyle anthem for a growing number of Aussies.
A surging number of city-slickers are heading to the bush or bay, new Commonwealth Bank research shows.
In fact, metro to regional relocations are now 20% higher than pre-Covid.
It goes to show that regional towns and cities have a lot going for them.
So what’s the appeal?
Along with a laidback lifestyle and the chance to see Skippy on your way to work, rather than countless sets of traffic lights, a key drawcard of regional living is more affordable housing.
The Sunshine Coast in South East Queensland is currently the nation’s most popular destination for Australian movers, securing a 16% share of net internal migration over the past 12 months.
Other popular areas outside our nation’s capital cities include the Gold Coast, Wollongong, Newcastle, Lake Macquarie, Moorabool, Geelong, the Alexandrina region, the Fraser Coast and Launceston.
Western Australia is also becoming an increasingly attractive destination with Busselton, Capel, Greater Geraldton, Northam and Albany all making their way onto various hotspot lists this quarter.
Across Australia’s capital cities, the median home value is about $864,780, according to CoreLogic.
By comparison, the median value across regional markets is $626,888.
That’s a whopping $237,892 difference.
The price gap can be far bigger depending on where you’re moving from and moving to.
In Sydney, for instance, the median house value is $1,441,957. Head to regional NSW, and you could pay closer to $760,000 for a house – a saving of around $680,000!
Buying a more affordable home can have other flow-on benefits, such as a lower stamp duty bill.
It can also have a huge impact on home loan repayments.
For example, let’s use the above figures and pretend you’re deciding between purchasing an $864,780 capital city home and a $626,888 regional area home.
To keep things simple, let’s say you’ve saved up $173,000 for a 20% deposit on the $864,780 home – and you’ve also got extra money set aside to cover any stamp duty expenses or other fees (the exact amount would vary state to state).
Let’s also assume a home loan rate of 6.4%, which the Reserve Bank of Australia says is about the current average principal and interest variable rate, and a 30-year loan term.
On this basis, the initial mortgage for the city home would be about $692,000 and the monthly mortgage repayments on the city home would come to around $4,329 each each month.
For the regional property, your initial mortgage would be about $454,000 (assuming you put the full $173,000 towards the deposit) with monthly repayments in the order of $2,840.
That’s a monthly saving of $1,489 by moving to a regional area – extra money to spend on your home, yourself or your lifestyle.
No one can say with certainty how property values will perform in the future.
What we can do however is look at how house prices have performed across regional areas in recent years.
CoreLogic says values in regional areas have jumped 51.1% ($212,000) nationally since March 2020, compared to an average of 31.5% ($207,000) across our state capitals.
So in terms of dollar values, the capital gains across both markets have been fairly similar in recent years.
Okay, regional living isn’t for everyone.
Even for committed fans, moving from a capital city to a regional area calls for careful planning and research.
But if you’re hankering for a home with a more manageable mortgage, give us a call today to discuss loan options that could help you get that tree or sea change happening sooner.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.
Borrowers are more spoilt for choice than ever before when it comes to home loans.
But who has time to sort through over 100 lenders in the market to pick out a loan that’s suited to your needs?
Your mortgage broker does.
But for the big end of town, increased competition can mean lower profit margins (and unhappy shareholders!).
That doesn’t mean brokers are at war with any particular bank though, as a few articles stated in the Australian Financial Review over recent weeks (here’s a great non-paywalled response).
As Mortgage and Finance Association of Australia (MFAA) CEO Anja Pannek succinctly put it: “Positioning banks as competing with brokers is like saying Hilton hotels is competing with travel agents, instead of Hyatt and Sofitel. It completely misrepresents how the mortgage broking industry works”.
What brokers do is streamline the home loan process. It’s just one of the reasons why mortgage brokers are the go-to choice for 74.1% of home buyers (and that figure has been steadily increasing!).
But our role isn’t just about helping you find a competitively-priced home loan with the features you may need.
We go much further.
Here are three other ways you can benefit from the support of a mortgage broker.
Behind the friendly face of your mortgage broker is a serious legal obligation.
We are bound by a Best Interests Duty.
It means we are required by law to always put your best interests first, providing home loan options that are based on your unique needs.
That matters because if a loan isn’t the right choice for you, it may not save you money in the long run, no matter how low the rate is.
Banks are not bound by the best interests duty.
Buying a home is possibly the biggest purchase you’ll ever make.
It’s also something you’ll probably only do a handful of times over your life. But this is something we help people through every day.
We can act as a trusted guide to help you navigate the complex process of buying a home with confidence.
We can also help you assess your borrowing capacity, so you can buy with confidence, and we can explain where you can consider making shifts in your budget to become home loan-ready sooner.
And because we’re focused on making things more straightforward for you, we take the jargon out of home buying – we can help you get your head around complex issues like lenders’ mortgage insurance, or how to prepare if you’re buying at auction.
It’s all about mentoring our customers at every stage of their property journey.
You and your home loan are likely to be together for a while. And we’ll be right there with you.
Our regular home loan reviews provide reassurance that your loan continues to be the right option for you, even as your life changes and evolves.
And when you’re ready to kick new goals – from renovating, to buying your next home, investing in a rental property, or simply refinancing – we’ll be ready to help guide you through the process.
Like to know more about how we can help? Call us today and discover why three out of every four Australian families come to a broker first.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Nan and Pop have always been good for birthday money, but one-in-10 grandparents are taking their generosity to the next level: helping their grandkids buy a first home.
Most of us have special memories of pocketing a few treats from Granny and Gramps.
But it turns out those small gestures of affection we knew as kids are morphing into something far more valuable than a few sneaky lollies before dinner or a surprise Lego set.
Research by Compare the Market shows almost three-quarters of Aussie grandparents are giving their families a financial helping hand.
Around 13% are lending money, 9% are chipping in with household bills, and one-in-10 are helping their grandkids buy a first home.
It goes to show that we’re never too old for grandparents’ treats.
But if your Gramps and Granny are keen to help you get started in the property market, it’s important to have some open conversations first.
It’s not unusual for first home buyers to need support from family – especially in this day and age – and it can come in a variety of ways.
One option is for a close relative to act as a guarantor for a first home buyer’s loan.
It’s a big ask for grandparents though.
If the borrower can’t keep up the loan repayments, a lender can ask the guarantor to pay off the debt – something that could leave Nan and Pop financially skewered.
If they can afford it, another way for grandparents to help their grandkids buy a home is by gifting money.
A cash gift doesn’t have to be huge to make a difference.
It can help grow a deposit or go towards upfront buying costs such as lenders’ mortgage insurance.
However, there are traps to be aware of.
You could get a ‘please explain’ from a lender when they see a lump sum of cash land in your bank account.
The bank may want to be sure it’s not a loan that grandma and grandpa expect to be repaid.
So, it can be a good idea for grandparents to write a letter spelling out that they are gifting the money unconditionally with no strings attached.
And while this should go without saying, it would be negligent of us not to stress the importance of nan and/or pop being completely sound of mind when gifting any money.
The last thing you’d want to do is leave them short in funding their retirement, or start a rift (or legal battle) with other family members who love and care for them as much as you.
Buying a first home is a special milestone, and it’s extra special when family members rally around to lend a hand.
But as we’ve outlined today, it’s not without its potential pitfalls.
So call us today to find out the different ways your family might be able to help you buy a place of your own.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.
Picture this. You’ve seen a home you’re crazy about, and you don’t want to miss out to another buyer. So, you sign on the dotted line and hand over your deposit.
Things are getting real now. But what if they’re not? What if you struggle to land a home loan?
It’s a scenario every home buyer dreads.
If you have to back out of the contract because you can’t get loan approval, you could lose your deposit.
One possible solution, however, is to make your offer ‘subject to finance’.
In practical terms, making an offer subject to finance means an extra clause is added to the sale contract.
Essentially, it can allow the buyer to walk away from a sale with their deposit intact if mortgage finance can’t be arranged within a set timeframe.
Understandably, the seller won’t wait around forever. So, the time allowed to secure loan approval can be tight, often a matter of days.
However, a subject to finance clause could help you avoid a last minute race for finance – a pressure-cooker situation that could see you accept a loan or lender that’s not right for your needs.
There is a catch to making an offer subject to finance: the seller doesn’t have to agree to it.
In today’s property market, homes are selling fast – in as little as 10 days in some neighbourhoods.
With that sort of buyer demand, there may not be much incentive for a seller to agree to an offer that’s subject to finance.
Or, if you’re buying at auction, the sale is usually unconditional. Chances are you won’t have an opportunity to alter the sale contract.
These drawbacks highlight the value of speaking to us before you go home hunting.
Having your loan pre-approved, for example, can take away a lot of the uncertainty around securing finance.
When you’re ready to climb the property ladder, another key question is often whether it’s better to sell first and buy later.
With money in the bag from the sale of your old home, you may be less concerned about making an offer subject to finance.
That said, if you see a place you want to buy before your home sells, a bridging loan could cover the funding gap.
The beauty of a bridging loan is that this type of finance usually requires interest-only payments, not principal and interest payments.
The downside is that the interest rate tends to be higher than for a traditional home loan.
There’s a lot to plan for when you’re buying your next home.
Call us to streamline your purchase. From subject to finance offers to bridging loans, upgrading can be a lot less stressful when you know the options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.
The 2024 federal budget is out, and you might be wondering what’s in it for you.
Sure, an energy rebate of $300 annually can help take the sting out of electricity bills, though at $75 per quarterly bill, it’s not a huge saving.
But you don’t need to rely on the federal budget.
Here are four strategies that could get your wealth growing.
Disappointed that the federal budget didn’t offer more support for first home buyers?
There is still a wide choice of home buying assistance schemes to pick from.
Take a look at:
– The Home Guarantee Scheme that lets eligible first home buyers, regional Australians, and single parents buy a place of their own with a low deposit (between 5% and 2%) and zero lenders mortgage insurance.
– The First Home Owner Grant, which is usually worth $10,000 but can be up to $30,000 (depending on your state) when you buy or build a new home.
Don’t forget stamp duty concessions (in most states) and the First Home Super Saver Scheme that can let first home buyers use their super to grow a deposit.
Not sure what you’re eligible for?
Talk to us to find out which first home buyer schemes you can tap into.
Why wait for the Reserve Bank of Australia to cut rates?
You may be able to pocket rate savings of your own.
Lots of savvy home owners are jumping ship, with around $16.02 billion worth of home loans refinanced in March 2024.
It goes to show that savings can still be up for grabs for borrowers who switch to a lower rate home loan.
Call us today to find out how your loan shapes up, and discover how much you could save by switching.
Lending to property investors has jumped 31% in the past year.
It’s being driven by an 11% rise in property values since January 2023 – a jump that’s seen home owners notch up thousands of extra dollars in home equity.
The good news is that this home equity could potentially be used in place of a cash deposit to invest in an investment property.
Talk to us today about unlocking your home equity and becoming a property investor.
The federal budget has confirmed that 13.6 million Australians will pocket tax savings from 1 July.
And there’s a good chance you’re among them.
The Stage 3 tax cuts are expected to deliver an average tax saving of $1,888 a year, or about $36 weekly.
On the face of it, that’s not a game changer when it comes to your weekly budget, but it can help you in more ways than one.
That’s because it can also boost your borrowing power if you’re buying a first home, upgrading to your next home, or planning to invest.
RateCity has crunched the numbers, finding that for a single person on an income of $100,000, the Stage 3 tax cuts could add an extra $21,000 to their borrowing power.
A couple with a combined annual income of $150,000 could see their borrowing capacity jump by almost $30,000.
If the federal budget has left you hankering for more, it’s time to take matters into your own hands.
Whether you’re a first home buyer, home owner looking to save on your home loan, or property investor looking to grow your wealth, call us today for insights into how you can take the next step in your property journey.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!
When you’re saving for a first home, growing a 20% deposit can be a tough challenge.
It’s certainly not made any easier by national property values soaring higher each month and cost of living challenges.
But there is one potential solution that has seen 156,000 first home buyers, single parents and regional Australians buy or build a home of their own over the past four years – it’s the federal government’s Home Guarantee Scheme (HGS).
The HGS helps eligible first home buyers and single parents buy a home sooner by requiring only a small deposit.
The scheme has three different parts.
First home buyers can take advantage of the First Home Guarantee, or the Regional First Home Buyer Guarantee if they live outside a major city, while the Family Home Guarantee is pitched at single parents buying a home.
The common thread is that the scheme lets eligible buyers get started on the property ladder with a smaller deposit – and no need to pay lenders mortgage insurance (LMI).
First home buyers may need as little as a 5% deposit, while solo parents can buy with just a 2% deposit.
The HGS doesn’t provide a cash payment or a deposit for a home loan.
Instead, the Federal Government guarantees the loan, which is the key to buying with a small deposit while avoiding LMI.
The big plus of the HGS is that it gives buyers a head start in the property market.
According to Domain’s latest First Home Buyer Report, it can take over six years to save a 20% deposit on an entry level home, depending on where you buy.
The catch is that by the time you’ve saved that sort of deposit, home prices may have soared higher, pushing the goal posts further out of reach.
However, the beauty of the HGS is that it lets first home buyers jump into the property market about four years earlier (on average) than they normally would.
The HGS does have eligibility requirements, including income thresholds and property price caps that differ by state.
Give us a call, and we can explain whether or not you’re eligible.
The other thing to be aware of is that not all banks have signed up to the HGS.
That’s why it’s so important to speak to us at an early stage.
We can save you plenty of time, by explaining which lenders offer low deposit/no LMI home loans under the HGS, and put forward to you loans and lenders that suit your needs.
The HGS is only available to a limited number of home buyers each financial year.
And not surprisingly, places tend to fill fast.
So if you’d like to find out more about using the scheme in the rapidly approaching new financial year – and whether you might be eligible to buy with just a 5% deposit and zero LMI – get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.
The upcoming Stage 3 tax cuts have received plenty of attention – some good, some bad – so we won’t focus on the politics of it today.
But they are still expected to benefit about 13.6 million Australians, and how much tax you might save depends on your income.
A person on the national average wage of around $73,000 will pocket a yearly tax saving of $1,504, says the federal government.
If your income is, say, $100,000, you could expect to save $2,179 in tax each year.
For households juggling a cost-of-living crunch, the tax cuts can’t come soon enough.
But if you’re in the market for a new home, the tax cuts may offer an unexpected sweetener: a handy boost to your borrowing power.
Your borrowing power, or borrowing capacity, refers to the amount a lender is willing to lend to you.
It’s based on several factors including the size of your deposit, your household expenses, and your after-tax income (or take-home pay).
The higher your after-tax income, the more you may be able to borrow.
That could mean being able to buy a home sooner, or buying a more expensive property.
RateCity has crunched the numbers, finding that for a single person on an income of $100,000, the Stage 3 tax cuts could add an extra $21,000 to their borrowing power.
A couple with a combined annual income of $150,000 could see their borrowing capacity jump by almost $30,000.
It makes the upcoming tax cuts great news if you’re in the market for a first home, or if you’re upgrading to your next place.
Even if you don’t plan to borrow more, the increase to your take-home pay may make your current home loan repayments more manageable.
You may not need to wait for the Stage 3 tax cuts.
It is possible to increase your borrowing capacity in other ways, including:
1. Trim spending
Cutting back on non-essential expenses could free up extra cash to grow your deposit.
As household expenses are a factor many lenders look at when determining loan eligibility, trimming back regular costs could add to your borrowing power.
2. Cut back your credit card limit
When you apply for a home loan, lenders will look at the maximum limit on your credit card – not the outstanding balance.
That’s because you could max out the card just after buying a home, leaving less cash to manage mortgage repayments.
Contacting your card issuer to request a lower credit limit – or cancelling it altogether once paid off – could raise your borrowing power.
3. Increase income
Sure, it’s easier said than done.
But if you can take on extra shifts for a few months, convince the boss you deserve a pay rise, or start a side hustle, your bank balance – and borrowing power – could both benefit.
Yes, there are online calculators that roughly estimate your borrowing power.
The catch is that these don’t take into account the different criteria applied by each lender. And they don’t know you, your expenses and your goals.
That’s why it’s important to talk to us to get a more accurate picture of your borrowing power.
We can get to know you, your expenses, and the kind of property you have your eyes set on, and then help you come up with a plan to try and make it happen.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
