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Turning Dreams into Keys: First Home Buyer Rebates and Your Path to Homeownership

April 2, 2024

To borrow or not to borrow? That’s the question on many aspiring first-home buyers’ lips right now. We can’t blame you, either. It can seem like there’s something new shaking up the market every other week. It’s easy to feel left in the dark, so we’re here to shed some light on this tricky topic.

What’s actually happening in the housing market?

After a ream of record interest rate rises shook the housing market in 2023, many first-home buyers are weary of what 2024 has in store for them. Luckily, it seems that not only have we passed the peak of interest rate rises, but inflation is also coming under control. The knock-on effect of this will be the return of consumer (that’s you!) confidence, resulting in buyer and seller activity picking up once again.

Now’s a good time to start putting together an action plan to turn your homeownership dreams into a reality. We’re not guaranteeing that it’ll be a walk in the park, but we are saying there’s a window of opportunity to get your hooks into the housing market before everyone else clocks on.

Debunking your misconceptions about entering the market

There are a handful of misconceptions that first-home buyers commonly have about entering into the housing market:

• ‘I can’t get into the housing market without a full 20% deposit saved’
  • Multiple state and federal schemes are available for first-home buyers to alleviate some of the financial burden of buying a first home. Some of these even allow you to borrow up to 95% of the purchase price.

• ‘I’ve saved my full deposit, so now I’m ready to buy’
  • Saving up a 20% deposit is a huge achievement, and you should be very proud of yourself for it. But you also need to set money aside for other costs like stamp duty, legal fees and inspection costs. 

• ‘If I get a guarantor, then my borrowing capacity will increase’
  • Your borrowing capacity is based solely on your annual income. Having a guarantor or strong savings position can be beneficial in making your deposit, but they won’t have any bearing on the amount of money you can actually borrow.

Assessing your financial position

Buying your first home isn’t something you can do by the seat of your pants; you’ll need to do your homework. That means researching, assessing your finances, and making a financial plan to save for your deposit. If that sounds like a headache or you don’t know where to begin, a mortgage broker like us at Connected Finance can help set you on the right path.

Examining your finances

When first-home buyers work with a mortgage broker, they’ll start by asking questions like this:

• Do you have a deposit saved?
• Do you have access to a guarantor?
• Are you purchasing by yourself?
• What is your current employment status?
• Have you heard about the government schemes that might be available to you?
• Do you have any ongoing liabilities? Personal Loans, Student Loans, Credit Cards ect. 

 

These questions help your mortgage broker to scope your current financial situation and possible avenues forward. Having a deposit saved is obviously very important, but if you haven’t got the full 20% yet, your mortgage broker can help you find government schemes to alleviate some of that financial burden. Your employment status, whether you have a guarantor, if you’re purchasing by yourself or with someone else and if you have any ongoing liabilities will also impact your home loan application and borrowing capacity. 

The benefits of assessing your financial position now

Assessing your financial position as a first-home buyer is one of those things that’s easy to put off. You might think that it’s too much work, that it’ll be disheartening, or even that if you just keep saving, it’ll all work itself out. But as they say, knowledge is power, and knowing your current financial position will help empower you to make a decisive long-term plan for home ownership.

Some of the top benefits of assessing your financial situation now are that:

• You may be surprised by what schemes, grants and other initiatives you can take advantage of to speed up your purchase timeline.
• You can get a clear understanding of exactly how much money you need to save to reach your desired purchase price and cover additional costs like stamp duty, legal fees and inspection costs. 
• You will understand what your income needs to be to acquire a loan that allows you to meet your desired purchase price, or what is within your budget at your current income.
• You will learn what impact your current debts and liabilities have on your borrowing capacity. That way, you have time to address these potential issues early on.

First-home buyer rebates available as of 1 July 2024

There are loads of rebates, schemes and initiatives available to you as a first-home buyer. Each one offers different benefits and there are varied requirements and limitations on all of them. Your mortgage broker can help you determine which ones might be suitable for you.

Our top picks, as of 1 July 2024, are:

• First Home Guarantee (also called First Home Loan Deposit Scheme) — The government guarantees part of your deposit, up to 15%, so you can pay a deposit of as low as 5%.
• First Home Owner (New Homes) Grant (NSW only) — Receive $10,000 from the government to use towards your purchase of a new home valued under $600,000.
• First Home Buyers Assistance Scheme (NSW only) — Full or partial exemption from paying stamp duty (a tax on the value of your home) on properties valued under $800,000.

Ready to turn your dreams into keys? We recommend reaching out to an expert like us at Connected Finance. We’ll help to make your path toward homeownership as a first-home buyer as simple and cost-effective as possible.

Appointments with Connected Finance are free of charge, so you don’t have anything to lose by booking a time to chat with our team and learn more about your home loan options.