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Saving for a deposit is one the biggest challenges of buying a new home and the first major hurdle most homebuyers face.
It can be a very daunting and difficult task. But it doesn’t have to be.
You need to have a plan, you need to be disciplined in following it and be prepared to make sacrifices. However there are some shortcuts you can take that could turn those new home hopes into reality sooner rather than later.
Here’s how.
What to do if you are buying off-the-plan
If you’re buying an apartment off the plan, you can apply to postpone paying stamp duty for up to 12 months after the property becomes officially yours. This will give you more time to save up the money needed to cover the costs of buying your new home.
To be eligible for this scheme, you must be an Australian citizen, a New Zealand citizen with a subclass 444 visa, or a permanent Australian resident.
You can apply for the stamp duty deferment here.
What to do if you are a first home buyer
If you are a first home buyer, you may be eligible for grants from both state and federal governments totaling up to $20,000. That is $20,000 you might otherwise have spent years saving up, and will likely enable you to meet your deposit requirements much faster.
NSW residents might be eligible for a $10,000 grant from the state government under the First Home Owner Grant (New Homes) scheme. If you’re a first home buyer of a new dwelling (this includes off-the-plan purchases) you may qualify.
You can apply for the scheme here.
The federal government’s First Home Loan Deposit Scheme enables first home buyers with as little as five per cent deposit to avoid paying lenders mortgage insurance. These home buyers with less than a 20 per cent deposit would normally need to pay for this insurance, at a cost of around $10,000.
However this scheme guarantees the government will cover the exposure to risk lenders mortgage insurance usually does.
You can apply for the First Home Loan Deposit Scheme here.
Stamp duty exemptions and concessions
If you are an eligible first home buyer in NSW, any property you purchase under $650,000 is exempt from stamp duty (also known as transfer duty). This will save you up to $25,000.
Stamp duty concessions for first-home buyers are available on a sliding scale for properties worth up to $800,000. This can save you up to $32,000.
This is known as the First Home Buyers Assistance scheme. You can apply for it here.
Grants accessible to all types of home buyers
The recently announced federal government COVID-19 building stimulus package HomeBuilder allows eligible applicants a $25,000 grant to help them buy a new home. This includes off the plan purchases and it is open to all types of home buyers, including first home buyers, upsizers and downsizers.
That’s another $25,000 you won’t have to spend years saving up for.
You can read all about the HomeBuilder scheme here.
Moving forward
As a guide, most financial advisers say you should be spending no more than a third of your income on your mortgage. You should factor this into your budget when you are deciding the value of the property you can afford and then what mortgage repayments you can reasonably make.
But first, you have to save up your deposit and eligible home buyers may be able to gain up to $45,000 worth of government grants towards this. You might also be eligible for stamp duty exemptions or concessions worth up to $32,000. That is another considerable sum that can get you into your new home sooner.
To view our current projects at Toplace as you search for your new home, click here, or for help in your search contact us here.
Good luck from Toplace with your search!
Disclaimer: If you’re considering buying property, you should seek sound professional financial, legal and taxation advice before doing so, taking into account your personal circumstances.