• A foot in the door for first home buyers

    If you’re thinking about jumping into the property market, here are some tips that could help you take that first step sooner.

  • If you’re thinking about jumping into the property market, here are some tips that could help you take that first step sooner. 

    Buying property is a prized goal for many young Australians. But with the property market so strong in Australia, it can be hard to get your foot in the door – which is why every bit of help is so valuable. 

    Right now there are number of opportunities and incentives that could make life easier for first home buyers. Here are some of the key ones: 

    1.     All-time low interest rates

    It wasn’t that long ago (early 1990s in fact1) the official cash rate was more than 10%. Today it’s just 0.10%, meaning many people can now get a mortgage with an interest rate of between 2-3%. 

    While there’s no guarantee interest rates will stay this low forever, it’s a great opportunity to get ahead on your home loan and build a buffer against future rate increases. Most lenders also give you the opportunity to fix your rate for up to 5 years if you’d like some additional certainty. 

    2.     New purchase rebates

    Some lenders are offering new purchase rebates to people who commence new home loans. These offers aren’t strictly for new home buyers, but as long as you meet the minimum loan size you may be eligible for this rebate – providing yet another boost to help you cover the cost of your new home. 

    3.     First Home Owner Grant  

    You may be eligible to receive a one-off grant from your state government on your first home purchase. This could take the form of a stamp duty discount, or it may be paid as a grant to reduce the balance of your home loan on settlement. 

    Different states have different rules and grant options, but you can find out if you’re eligible using the following links:

    New South Wales

    Victoria

    Queensland

    South Australia

    Western Australia

    Tasmania

    Northern Territory

    4.     Bank of Mum and Dad 

    It’s a fact of life that many people need financial help from their parents to buy their first home. A survey by Digital Finance Analytics found that 60 per cent of first home buyers in the March quarter had received financial help from their parents – with an average financial contribution of $89,6372 

    Parental help is often in the form of a ‘gift’ or loan towards a deposit. Importantly, this can help you avoid Lender’s Mortgage Insurance – which is an additional cost to borrowers who aren’t able to pay a 20% deposit.  

    Another option may be for your parents to sign up as ‘guarantor’ on your loan (sometimes called a ‘parental guarantee’). This is where your parents use their own home as security for your home loan, which can help you get onto the property ladder sooner.   

    However, guarantor loans are not available to everybody and it could leave your guarantor liable if you are unable to meet your repayments. It is important to assess your loan options with a home loan specialist who understands your specific financial position and situation. 

    Want to learn more? 

    Check out the First Home Buyer page for more tips and calculators so you know where you stand. Happy house hunting!  

     

    1Reserve Bank of Australia statistics

    2ABC News, 3 May 2021

     

    Select a topic to view more blogs and videos:

     

  • Have us call you

    We'll be in contact within 2 business hours

    * Required

    By submitting this form you acknowledge that you have read and accept our privacy statement

  • Disclaimer:

    While such material is published with permission, RAMS is not responsible for its accuracy or completeness.  This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice.