You’ve probably heard the federal government is giving $25,000 grants to eligible Australians looking to build or substantially renovate their homes. Today we’ll look at what that means for first home buyers when combined with state and territory schemes.

If you’ve been umming and ahhing about purchasing your first home for a while now, we have great news: you’d be hard-pressed to find a time when there were more government incentives to help you enter the property market.

For starters, there’s the federal government’s First Home Loan Deposit Scheme, which can help you buy your first home with a deposit of just 5% without having to pay lenders mortgage insurance (LMI) – so that’s one major cost out of the way.

But you’ll still need that 5% deposit, right?

Well, each state and territory (except ACT) has a first homeowner grant program, with most grants between $10,000 and $20,000.

On top of that, the federal government will give eligible Australians $25,000 to build or substantially renovate homes as part of the new HomeBuilder scheme (however, at this stage it’s still unclear whether or not this amount can go towards your initial deposit).

Last but certainly not least, most states and territories have stamp duty discounts or exemptions for first home buyers too, which can save you tens of thousands of dollars – another hurdle cleared!

Below, we’ll break down exactly what’s on offer in each state and territory and just how much these government initiatives could help put you within reach of a deposit on your first home.

NEW SOUTH WALES

First homeowner grant: $10,000 for new homes valued up to $750,000.

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: exemption on homes up to $650,000, partial concession on homes between $650,000 and $800,000.

With HomeBuilder, you could have: up to $45,000 in government support + stamp duty exemption.

VICTORIA

First homeowner grant: $10,000 (urban) and $20,000 (regional) for new homes valued up to $750,000.

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: exemption on homes up to $600,000, partial concession on homes between $600,001 and $750,000.

With HomeBuilder, you could have: between $45,000 and $55,000 in government support + stamp duty exemption.

QUEENSLAND

First homeowner grant: $15,000 on new homes valued at less than $750,000.

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: exemption on homes up to $500,000, partial concession on homes up to $550,000.

With HomeBuilder, you could have: up to $50,000 in government support + up to $15,925 in stamp duty concessions.

WESTERN AUSTRALIA

First homeowner grant: $10,000 on new or substantially renovated homes valued at less than $750,000 south of the 26th parallel (latitude), or less than $1,000,000 north of the 26th parallel. WA also offers $20,000 grants for new homes built on vacant land or off-the-plan single-storey developments.

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: exemption on homes valued at up to $430,000, partial concession on homes up to $530,000. An off-the-plan unit rebate is available for more expensive homes.

With HomeBuilder, you could have: up to $65,000 in government support + applicable stamp duty concessions.

SOUTH AUSTRALIA

First homeowner grant: $15,000 on new homes valued up to $575,000.

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: full concession on off-the-plan new or substantially refurbished apartments up to $500,000.

With HomeBuilder, you could have: up to $50,000 in government support + stamp duty concession.

TASMANIA

First homeowner grant: $20,000 on new homes (reduced to $10,000 from 1 July 2020).

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: a 50% discount on stamp duty for established properties valued at $400,000 or less.

With HomeBuilder, you could have: up to $55,000 in government support.

AUSTRALIAN CAPITAL TERRITORY

First homeowner grant: none.

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: first home buyers in the ACT pay no duty so long as their household income is below $160,00-$176,650, depending on how many dependents you have.

With HomeBuilder, you could have: up to $35,000 in government support + stamp duty exemption.

NORTHERN TERRITORY

First homeowner grant: $10,000 for new homes.

First Home Loan Deposit Scheme: LMI saving of up to $10,000.

Stamp duty: you can get up to $18,601 off your stamp duty costs.

With HomeBuilder, you could have: up to $45,000 in government support + up to $18,601 in stamp duty savings.

Get in touch

So, that covers the first home buyer schemes. If you think you might be eligible, the next thing to organise is financing your new home.

And that’s where we come in. Lenders will still want you to show some sort of genuine savings before they’ll approve a loan application, and we can help you get everything in order for that assessment process.

So if you’d like help obtaining finance to pay for the first home of your dreams, get in touch with us today – we’re here to help you any way we can.

 

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.

With Australia currently enduring its worst bushfire season on record, we all want to do our little bit to help out, so today we thought we’d discuss the important topic of underinsurance.

Indeed, researchers are warning that the nation is facing an underinsurance crisis, according to a recent report by the ABC, with the Insurance Council of Australia saying more than four out of every five homes affected by bushfires are underinsured.

Federal MP Susan Templeman had her home destroyed by a bushfire in 2013 and had one thing on her mind as she was walking past burnt-down houses on her street: “Gee, I hope I’ve paid the insurance”.

Fortunately, her insurance payments were up to date. However, her insurer still didn’t give her the news she was hoping to hear.

While her insurer said they’d pay out her claim, they advised they wouldn’t rebuild her home as she was underinsured.

You see, even though Ms Templeman had insured her home for its market value of $400,000, the cost to rebuild was about $600,000.

“And that was just like a bolt from the blue. It completely threw us,” she said.

Ms Templeman ended up selling an investment property to help make up the shortfall. But her neighbours on either side never rebuilt.

How are homes underinsured?

Chloe Lucas, research fellow at the University of Tasmania, explains that most homeowners don’t find out that they’re underinsured until it happens to them.

“Most people use insurance calculators online and it’s very hard to get those to give you a calculation that really reflects the real value of your property,” Ms Lucas told the ABC.

“They are most often based on the market value of your property, and that’s very different to the cost of rebuilding after a disaster.”

Ms Lucas suggests owners consider adding at least 20% to what they think their house is worth to avoid underinsurance.

How else could it affect me?

Chances are, if you haven’t updated your home and contents insurance in several years, you could be underinsured.

There is also an astounding 23% of Australians who have no home and contents insurance at all, says the Insurance Council of Australia.

How can I avoid underinsurance?

Here’s a quick checklist to see whether you’re sufficiently covered:

1. Check your policy and talk to your insurer to understand how much they will currently pay and under what circumstances.

2. Pay attention to clauses around fires and floods, particularly if you live in a higher-risk area.

3. Make sure all your items are covered – many people find they are underinsured because they forgot to include new pieces of technology, home renovations or jewellery.

4. Consider the worst-case scenario – if your house and contents were to be destroyed, does your policy cover the full cost of rebuilding? Make sure you consider building costs today, rather than the original cost of building your house.

Final word

If your home or suburb has been affected by this bushfire season, please know that our thoughts are with you – we know as much as anyone how important the family home is.

If you’re in an area that’s susceptible to bushfires or other natural disasters but has not been affected this season, we hope you stay safe and that this article has been helpful.  Check your insurance cover now.  Make sure it reflects the cost to demolish and rebuild and most importantly replace the home you have now.    We can refer you to an insurance broker who can assist.    Just call us !

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

The property price caps in each state have been revealed for the federal government’s new first home buyer scheme. Read on to find out the maximum value of a property you can purchase under the scheme.

Imagine buying your first home with a 5% deposit and not having to pay lenders mortgage insurance (LMI).

Sounds good, right?

Well, the federal government has finally revealed more details in a draft mandate for the scheme, including the property price caps in each state.

The property price caps

Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.

– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)

– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)

– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)

– WA: $400,000 (Perth) and $300,000 (rest of state)

– SA: $400,000 (Adelaide) and $250,000 (rest of state)

– TAS: $400,000 (Hobart) and $300,000 (rest of state)

– ACT: $500,000

– NT: $375,000

Great, but what’s this scheme again?

Ok, so currently people with a deposit of less than 20% usually have to pay LMI.

But under the government scheme, eligible first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.

Now, it’s important to note that this is not a handout – it’s simply a government guarantee.

But this guarantee could be very helpful, as it could save you as much as $10,000 in insurance.

Any more details?

The scheme is due to commence on 1 January 2020.

In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

But here’s the catch: the offer is limited to just 10,000 first home buyer loans each year. That’s less than 10% of the 110,000 Australians who bought their first home in 2018.

So who gets first dibs?

That’s the million-dollar question! (or, depending on where you live, the $400,000 question).

It looks as though applications will be granted on a “first come, first served” basis.

So if you’re considering purchasing a property but don’t have a 20% deposit saved up yet – get in touch.

We’d love to run you through the scheme in more detail and help you plan ahead for the new year.

Just call us !

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Whenever the Reserve Bank of Australia (RBA) changes the official cash rate we all hear about how it will impact home loans. But it affects many other areas of finance and the economy, which we’ll look into today.

The RBA has cut the official cash rate to a new record low of 1%, just one month after lowering it to 1.25% – which was the first rate cut in almost three years (since August 2016).

Now, whenever this happens we all hear about what it will mean for mortgage-holders.

But it also has a flow-on effect for many other areas of finance, which we’ll look into below.

If you’re saving for a first home deposit

If you’ve got a large chunk of your money in a savings account and you’re trying to save for a first home deposit, the latest two RBA rate cuts probably aren’t the best news for you.

That’s because you want your savings account to have the highest interest rate possible and a cut in the official cash rate will likely mean a reduction in interest you earn on your savings.

If you are worried interest rates are going to be cut further, and you want to lock in a rate for a particular length in time, you can look into a term deposit account.

Alternatively, if you think now is a good time to jump into the property market, feel free to give us a call and we can run you through your financing options.

Car finance

If the RBA cuts the official cash rate, the interest rates on car loans generally go down too.

The bad news is that if you have already taken out a car loan it usually has a fixed interest rate for the period of your loan term.

The good news is with interest rates at an all-time low, if you’re thinking about buying a new car or refinancing an existing car loan, now might be the time to lock a rate in.

The many other types of loans

Changes to the cash rate affect interest rates on all kinds of loans, including commercial and business loans, asset and equipment finance, investment loans.

If you’re thinking about taking out any type of loan, or weighing up the pros and cons of refinancing, give us a call and we can give you the lowdown on the new landscape.

Credit cards

Yep, the official cash rate generally has an effect on the interest rate on credit cards too.

That’s because lowering the interest rate is meant to encourage people to spend more – including on plastic – which in turn can give the economy a boost.

If you’re someone who has been guilty of spending a little too much on your credit card, however, get in touch – we can help you look into consolidating it with other debts that are ripe for refinancing now.

Get in touch

Basically, it comes down to this: if you have an existing or prospective debt and you want to see how it all stacks up on the back of the two consecutive RBA rate cuts, then get in touch.

We’re following the market closely and can make sure you’re getting a loan that best suits your lifestyle now and for the future.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.