Buying your new home is very exciting because it is the beginning of a new chapter of your life. You’re not just buying some random object, but you will be buying an important piece of property that will be a repository of all the valuable memories you will be making with your family.
The first step to buying property is to figure out what you can afford. It helps by looking at homes that do not require such a large deposit. Check out No1 Property Guide New South Wales to see a list of homes that can match your dream specs and possible prices.
After you have decided, then you need to find ways to fund that home purchase. Here are some ways to get funding assistance for your home purchase apart from the traditional mortgage:
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The First Home Owner Grant
This first time home grant is also referred to as New Homes. This is for specific first-time buyers who are resident of New South Wales, Australia. This scheme offers a ten thousand dollar grant assistance for the purchase or construction of a new home. The property value must not exceed Aus $600,000 if purchased, and it must not exceed $750,000 if it to be constructed.
First Time Home Buyers Assistance Scheme
This FHBAS, as the name implies, is to help the first time home buyers acquire any home by giving them eligibility from transfer duty or providing concessions. Unlike the First Home Owner Grant, this one is applicable also for buying new homes, and it can also be used for buying an existing home and buying vacant lots where your home is to be constructed.
Under this scheme, a first time home buyers may be able to avail of a transfer duty concession or exemption. If the home you are looking at is valued at less than $650,000, then you can easily apply for a full exemption which means you no longer have to pay duty transfer. If the value of the home that you are considering is between $650,000 and $800,000, then you can request for a concession rate to lessen the value of the transfer duty you have to pay. The amount you will have to pay is based on the home value of the loan.
For those buying a vacant lot for residential purposes that have a less than $350,000, not a duty is payable. For those vacant lots valued at $350,000 and $450,000, concessions and discounts will be made for the purchase.
Variable Rate Loans
This is another popular option to seek funding assistance for many home buyers. This relies on the Reserve Bank of Australia’s constantly changing cash rate. On top of that, this is subject to the subsequent interest rate fluctuations. You cannot expect a fixed payment but a variety of payments. The implication of this loan is that buyers may have lower payments in certain months and higher payments in the other months, too.
Variable loans can be a bit scary because if the interest rate skyrockets, you are going to have to fork out a lot of money. You’ll never know what to expect from a variable loan because it is dependent on the market conditions. It is only beneficial when the rates are low.
Interest Only Loans
If you feel like escaping the traditional home loan payment, you can take this interest-only option. As the name suggests, you only pay for interest minus the principal for the time being. This is the preferred option of real estate investors who are looking to quickly sell the property again, as long as there is no depreciation in the property value. This is also a great choice for younger prospective homebuyers who have limited income.
Even if they have little money in the bank, they can still own their own home, and just top up the account later when they are already generating more income later on. Noteworthy: this interest only agreement can only last for seven years, after which, the home buyers now have to start paying for the principal in a typical interest payment plant.
Guarantor Loans
If you have a fairly big deposit ready and are looking to pay fifty or 80 percent of the home price tag, then consider asking a trusted family member like your parents to be your guarantor. With this method, you will not be stuck with high interest and the premium lender mortgage insurance. What happens here is a portion of their home equity is used as a security cushion for your own mortgage.
The bank will be more likely to approve your loan because there is less risk with a guarantor. Just make sure that you never default on the loan because the bank will go after their property if you fail to make your monthly payments.
Low Doc Loans
This is the fond nickname for these low documentation loans. Typically, an income declaration and other financial statements are needed by banks to assess a person’s financial capability to pay back their loan. However, not everyone has access to these standard papers like freelancers and self-employed individuals.
Going for a low doc loan means they can forgo presenting some of the usual paperwork. However, these come with higher interest fees compared to other loans in the market.
Non-Conforming Loans
This is targeted towards people with bad credit ratings and who have been unemployed for some time. Those who want to borrow eighty percent of their home value can consider these non-conforming loans that do not require documentation. Don’t confuse this with low doc loans because the borrowers of that one have a good credit line. Take note that these loans come at very high-interest rates so be sure you can afford the monthly payment before taking the plunge.
Also Read- 6 Essential Tips to Financing Your New Home
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