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Buying your First Home in Australia

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Buying your First Home in Australia

Buying your first home in Australia is getting more and more expensive as the years go by. Luckily, the Government has been implementing an increasing number of schemes to assist first home buyers in getting their first property and home loan.

All schemes are still subject to the banks’ general lending criteria, so you’ll generally want a good credit history & a savings history.

They will also need to check your affordability i.e. income and expenses.

If you have multiple credit cards or loans, it would be worth speaking to a Personal Loan Broker to see if you can consolidate these before you apply – this should help improve your affordability and overall profile.

For strong applicants, you may also be able to use a Personal Loan as part of your deposit or to increase your deposit to save on costs.

With a high enough credit score, personal loans are generally only about 4% higher interest than home loans, but can save you paying LMI (or reduce it at least).

Help to Buy Scheme

The Help to Buy Scheme Australia isn’t available yet, but is expected to be released sometime in 2023. It’s a Labor Government promise and will allow first home buyers to get into the Real Estate market with just a 2 percent deposit.

The scheme involves the first home buyer purchasing 60% – 70% of the property, with the Government purchasing the other 30% – 40%.

This will mean the first home buyer needs a lower deposit, has lower income requirements and gets offered better interest rates.

The first home buyer can later buy-back the Governments portion of the property when they’re in a position to do so.

Other Schemes available

The first home super saver scheme allows eligible applicants to withdraw additional Superannuation contributions, which they can use as their deposit for their first home purchase. This is a tax-efficient way of savings a deposit for your first home.

The First Home Owners Grant is different between states, but is a lump sum payable when purchasing a brand new home.

This can be used to increase your deposit thereby reducing your ongoing repayments and lowering your Lender’s Mortgage Insurance premium.

The Family Home Guarantee allows eligible single parents to purchase with just a 2% deposit.

The Government will guarantee the other 18% of the loan – thereby reducing Lender’s Mortgage Insurance to $0 and giving the first home buyer access to much lower interest rates.

Much like the Family Home Guarantee, the First Home Guarantee allows eligible First Home Buyers to purchase with only a 5% deposit. The Government will guarantee the other 15% so the bank can treat the loan as-if the first home buyer is contributing a 20% deposit.

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