Tips for Victorian First Home Buyers During A Pandemic

If you are a Victorian First Home Buyers and you are considering to put your toe in the water and buy your first home, there are lots of factors to consider from your budget, credit file and even what grants might be available to assist with the purchase of the property.

While you might have done the hard yards saving up a deposit, there are plenty of things to consider when you are a first home buyer purchasing your first home during the COVID-19 pandemic.

We’ve put together the grants and concessions Victorian First Home Buyers. They should consider as well as steps for how to save for a new home.

How Victorian First Home Buyers can take advantages of grants for their new home

There is a range of grants and initiatives from the government for new home buyers entering the market, in particular, the First Home Owners Grant which is available in every state and territory across Australia.

Victoria’s grant is $10,000 for First Home Buyers, and there is also an additional $10,000 available for regional first home buyers that buy or build in regional Victoria, taking the total amount to $20,000.

On top of the First Home Owners Grant, there is also the Home Builder grant that offers additional benefits and concessions for new home builds and renovations. The $25,000 grant can be used towards a new home build or a home renovation in each state and territory across Australia.

How can first home buyers save for a new home?

If you’re working towards buying your first home in Victoria, here are some ways new home buyers can save for a home.

Determine how much you can borrow & set a limit

– your budget and your ability to pay the loan is an essential step in the process for preparing to be a first home buyer. Take the time to understand the upfront costs of purchasing, the fees for lending, government fees, mortgage insurance fees, moving costs and any other factors you should include in your budget to determine what you can comfortably afford and borrow.

Check your credit report

– your credit report is an essential step in getting finance, and you should be sure there are no black marks against your name, and your credit file is in great shape.

Research locations for your home

– the location of your property is one of the key factors for home buyers, and you should take the time to explore the transport options, lifestyle, parks, shops, conveniences and local schools in close proximity to your property. While the location might seem idyllic, it is important to visit at a range of times throughout the day to ensure the location is perfectly suited for you outside of the standard open home times when there can be heavy traffic.

Explore finance options and grants

– there is a range of options for new home buyers when it comes to First Home Owners Grants, concessions for stamp duty and even concessions and grants for home builders. Take the time to get pre-approval and find out what you are eligible for as a new home buyer.

At the end of the day, buying a new home in the COVID-19 pandemic is a good choice for man first home buyers due to lower interest rates, and positive economic data backing an emerging housing market.

If you’re looking to take advantage of Victoria’s First Home Owner Grant or you would like to take advantage of exceptions and concessions, now is a great time to explore options for purchasing or building a new property.

At Achieve Homes, our custom builders provide a complete building solution from start to finish. Whether you’re looking for a house and land package or you’re searching for the perfect home in Victoria, Achieve Homes can help assist with the home buyer grant and house and land packages to suit your needs and budget.

With plenty of custom

house designs, display homes, and floor plans for our house and land packages available, Achieve Homes offers great options for the first home buyer getting into the market. If you would like to find out more about home and land packages and custom builds, get in touch today to find out how we can design a new home and take advantage of the First Home Owners Grant.  

 

What First Home Buyers Need to Know About Government Fees

For most people buying your first home is one of the most rewarding and exciting experiences of your life. However, it pays to do your homework and understand all the costs that are associated with making that life-changing decision.

Many first home buyers are often surprised to learn that the price of their new home comes with a number of additional Government fees and charges that need to be accounted for.

Fortunately, for first home buyers in Victoria, the Government offers a number of incentives to help assist new purchases to deal with some of the additional costs.

What is the first home buyers grant?

The first home buyer grant (FHOG) is a payment issued by the Government, to help new and young home buyers get into a new home they can live in. For those eligible, you might be able to receive a $10,000 grant to purchase a home in Melbourne or up to $20,000 for areas in regional Victoria.

To receive the grant, you must be buying or building a new home valued at under $750,000. The payment is made to you as a grant and is separate to other exemptions such as the stamp duty rebates.

Your new home can be a house, townhouse, apartment, or unit but must be less than five years old and be the first sale of the property. Established homes are no longer eligible to receive the FHOG.

For more information on FHOG in ACT and NSW, visit this article.

What is stamp duty?

When you purchase a home or vacant land in Victoria you will likely pay land transfer duty, otherwise known as stamp duty. Stamp duty will be the single largest cost that will come with buying a property and it’s one that needs to be accounted for prior to purchase, but fortunately for first home buyers in Victoria, you might not have to pay this particular cost.

Stamp Duty is effectively a Government tax that is applied to all property transfers. The rate of stamp duty varies from state-to-state and in Victoria it is calculated on a sliding scale based on the value of the property.

There are a number of factors that go into calculating stamp duty in Victoria and they include, whether you are going to live in the home (if it is your principal place of residence), whether you are a foreign buyer and of course whether or not it will be your first home.

If you qualify as a first home buyer in Victora and the property is valued at under $600,000, you could potentially not pay any stamp duty costs. First home buyers who purchase a property valued between $600,001 and $750,000 are also entitled to a stamp duty concession, but above that upper limit, you won’t be able to receive an exemption.

A good rule of thumb is to allow for 5% of the purchase price if you don’t meet the criteria of a first home buyer. Clearly there are advantages to purchasing or building a new home as a first home buyer in Victoria as you will possibly save up to $30,000 in costs.

For more information on Stamp Duty in ACT and NSW, visit this article.

What are rates?

Home and landowners are also forced to pay annual rates to the Government. This is usually a form of Local Government tax and the rates are used to help fund projects and infrastructure in your local community.

The amount you have to pay in rates again is determined by the value of the property as calculated by the valuer-general and is based on different council areas.

As a first home buyer in Victoria, you won’t be forced to pay rates at the time of purchase but will be forced to pay these on an ongoing basis while you own the property over its lifetime.

You can find out exactly how much the rates on a property will be by either asking the selling agent or contacting the local council directly.

First home buyers must also consider that from settlement date they will be liable for these council rates as well as water rates and any other special levies that might be applied by the council or even State Government.

What is land tax?

In Victoria, you might be forced to pay land tax on any property that you are not currently residing in. Land tax applies to investment properties, commercial properties and vacant land.

Similar to stamp duty, land tax is based on the value of the land and is applied on a sliding scale for total landholdings above $250,000.

Fortunately for first home buyers in Victoria, your home (known as your principal place of residence) is exempt from this form of land tax.

Benefits for First Home Buyers

Clearly there are some significant benefits if you are a first home buyer and you could save around $30,000 if you qualify for the exemptions from these Government fees.

It’s also important to note that most of these costs are one-off expenses so whether you are buying an established home or building your new home with a custom home builder in Melbourne, you can save a significant amount of money.

As of 2020, the Federal Government also introduced the First Home Loan Deposit Scheme, which effectively guarantees the bank loan you use to purchase a property.

What this means for first home buyers in Melbourne is that they can buy a new home with only a 5% deposit (95% LVR) and they won’t be forced to pay lenders mortgage insurance. LMI is generally applied to a loan where the applicant is seeking to borrow more than 80% of the property’s value.

At Achieve Homes, we always recommend seeking professional advice when assessing your circumstances and making financial decisions. However, if you’re interested on beginning your home building journey, contact us today at 1300 234 432 or email us at sales@achievehomes.com.au.

How to start the process of purchasing a house and land package?

Buying a house and land package can be both an exciting and daunting process for first home buyers. While the process itself is relatively straightforward, it is a little different to purchasing a ready- made (or preowned) home.

For the most part, house and land packages are generally offered by developers. Developers purchase parcels of land that might have previously been farmland in outer suburb areas and then go through the process of turning them into thriving communities, with all the great services and amenities you might expect from a more established suburb.

The first thing you need to ask yourself when starting the process of purchasing a house and land package is whether or not that would be a location you’d ultimately like to live in. You should take into consideration the distance from your workplace, as well as nearby schools for your family or future family. New subdivisions would have all of the amenities that you would need, as it is the job of the developer to create a vibrant suburb and community.

Land vs House and Land

When looking at house and land packages in VIC or ACT, the first question you’ll be faced with is whether to buy the land and construct a home on it or simply buy a completed house. There are benefits to both.

If you buy a completed house, you are able to move in straight away and start to enjoy the advantages of living in your own home sooner. On the flip side, if you aren’t a first home buyer, you will likely be forced to pay stamp duty on the entire property. By purchasing the land and then constructing the house, you only pay stamp duty on the land component, which will make it considerably cheaper. However, you also get to build the exact home that you want to live in – which is often the major appeal of purchasing a house and land package.

When buying the land only, you also might be eligible to put down only a 5% deposit, whereas by buying the ready-made home, that deposit could be 10%. The exact deposit and financing structure will be different depending on the project and of course, you can always obtain your own financing through a mortgage broker.

Building Your Home

The idea of building your own home is often why the process feels daunting to first home buyers – but it doesn’t need to be.
You can even visit the land development site to look at the display homes in order to get a feel for the community and the homes. As a custom home builder in Melbourne and Canberra, Achieve Homes offers a wide range of house and land packages for you to choose from. We can guide you through the selection process to ensure that you find a package that suits you, your lifestyle and budget.

We also offer various home designs for you to choose from, so you can take your pick at whatever tickles your fancy. If that’s not for you, we also provide knockdown rebuild as well as quote and build services.

Contact us today at sales@achievehomes.com.au.

4 Things You Need to Know About Home Loans

Purchasing your first home is an exciting process, however, saving for a deposit and obtaining a home loan can be an arduous process. As a custom home builder, we are more than ready to help you build your dream home, but first, you need to obtain a home loan.

Before you approach a lender or mortgage broker, you will need to be well-prepared. We can prepare a fixed quote for your new home to submit to your lender but you will also need to get your financial affairs in order to create the best impression possible. So, start paying down credit cards and any other debts such as personal loans to ensure your credit rating is positive.

The more knowledge you can acquire about the whole home loan application process before you step into the fray the better, so here are some terms you need to get to know:

What is mortgage insurance?

Mortgage insurance is only applicable when you borrow more than 80 per cent. It protects you in the case of defaulting on your loan (not being able to make your monthly repayments for a period of three months). If you default on your loan, your lender may start legal proceedings to obtain the arrears which could mean you need to sell your home or the bank may foreclose. You do not want this to happen!

Anyone can become ill, have an accident or lose their job, so taking out mortgage insurance is an important step to protect you against default in the event of unforeseen circumstances and disasters such as the recent bushfires and COVID-19 pandemic which have adversely affected Australians throughout the country.

If you are self-employed or in another high-risk category, your lender may add Lenders Mortgage Insurance (LMI) costs to your home loan. Unlike mortgage insurance, LMI protects the lender, not you, if you default on your loan repayments.

What is a deposit?

The deposit on a home loan is the cash required by the lender before approving your home loan application. Usually, this is 20 per cent of the overall loan you will need to purchase your block of land and build your home. If you are eligible for a First Home Buyer’s Grant, this should assist you with raising money for the deposit. In Victoria, the grant currently gives eligible first homeowners: $10,000 towards buying or building a new property up to the value of $750,000; and $20,000 if that property is a newly built home in a regional area, and contracts were signed between 1 July 2017 and 30 June 2020. For more information visit the State Revenue Office of Victoria. This site also has a calculator to find out how much land transfer (stamp) duty you will need to pay on top of the cost of your land.

As well as land transfer duty, you will need to save for other costs on top of your deposit, such as bank fees.

What is interest?

The interest on your home loan is a percentage you pay on top of the principal (which is the total amount you are borrowing). Interest on home loans are currently at historic lows but shop around for the lowest interest rate you can find to keep your repayments as affordable as possible. A good mortgage broker can do this for you, as well as finding the right type of home loan that meets your particular needs. Remember that interest rates could rise again at any time so make sure you have some wriggle room in your budget to cover this if need be. Your mortgage broker may advise you to take out a Fixed Interest Home Loan where your interest payable is fixed for a set term (usually three years) then reverts to a Variable Home Loan (where the interest payable changes due to market factors and the bank's discretion).

What are bank fees?

Most lenders will charge you a home loan establishment fee which varies from around $500 to $700 and a settlement processing fee (usually around $100). These fees will generally be added to the total owing in your home loan. We understand that as a First Home Buyer, the home building process can be daunting, which is why you need a home builder that can walk you through the process every step of the way. Achieve Homes is a custom home builder in Melbourne and Canberra that can guide you through your home building journey.

Get in touch with our team today at sales@achievehomes.com.au.

Best suburbs for millennials to buy a first home

When you’re looking to buy your first home in the Canberra area, pouring through the suburbs can feel confusing.

While each has its attributes, how do you know whether it’ll be right for you in the long term? Fortunately, we have prepared a guide on which suburbs are best for your first home.

What makes a Canberra suburb good for a millennial?

Aside from affordability, the Financial Times reports that millennials want to live in locations where they can spend time with friends. As such, you might be looking for a home that’s close to cafes, bars, and parks.

If you don’t own a car, commuting features start to come into play. How reliable is public transport in your area? And, will it get you to work quickly?

With a greater emphasis on well-being than many other generations, you may also crave an abundance of local amenities that facilitate your lifestyle, such as green outdoor spaces, gyms, and meditation centres. On the topic of mindfulness, if you’re thinking toward the future, you might want to look at suburbs that complement future family life.

Landscape photograph of Lawson area in Canberra
Image credit: Suburban Land Agency | suburbanland.act.gov.au/lawson/about

Which Canberra suburbs are good for millennials buying their first home?

  • Googong
    With affordable housing and plenty of green open spaces, Googong is ideal if you’re after a relaxing lifestyle with essential amenities nearby, whilst still being within reasonable distance to Canberra’s CBD.
  • Greenway
    The local population has a median age of 35, plenty of edgy coffee shops and restaurants, and some affordable property developments, illustrating that it’s already a popular choice amongst millennials.
  • Taylor
    As an area in development, Taylor is set to feature two dedicated primary schools, a top-of-the-range shopping centre and other excellent community amenities, in a natural setting.
  • Lawson
    With low traffic and bordered by a lake, Lawson is perfect if you want urban living in a new community, just moments from some of Canberra’s most prominent facilities including University of Canberra, AIS and Canberra Stadium.
  • Watson
    Based in north Canberra, Watson is an established suburb that combines affordable house prices with a litany of desirable schools, close proximity to Dickson’s dining precinct and moments from Canberra’s CBD.

Doing your research before buying your home

Before purchasing your first property, consider what makes it perfect for you in terms of location. Try to look towards the future while doing this. For example, if a property’s main selling point is a quick journey to work but you’re likely to change office locations, could you look for something more suitable? Or, if minimalist living is quirky now, will it remain so if you have a family?

Should you need any extra advice on the right suburb for your first home, talk to us. At Achieve Homes, we have plenty of experience in helping millennials throughout Canberra find the perfect property for them.

Watch out for Watson

It’s a stone’s throw from some of Canberra’s seemingly wealthy suburbs including O’Connor, Reid and Turner, though Watson’s draw card has long been its affordability.

Just six kilometres from the city centre, a commute soon to be smooth sailing with the introduction of the light rail, Watson could be your foothold into the sought-after district.

With median house prices below the Canberra average, and new developments planned to stretch the suburb’s residencies towards the NSW border it’s an area that won’t fly under the radar for long.

As the Watson appeal becomes apparent, it’s no doubt more seven-figure sales are on the way, yet as it stands this ‘burb has so far remained relatively cheaper than its surrounding counterparts.

So, who’s looking? First-home buyers and some investors, but it’s mostly young couples, looking to be closer to the CBD, enjoying tree-lined properties along parks that aren’t too expensive.

If the buyers are looking for hustle and bustle of city living, then Watson may not be for you. Its appeal lays heavily on the fact that it retains its suburban feel while reaping all the benefits of proximity to the CBD.

Image via Makin Trax

A resurgence of families can’t be ignored in the area either. Positioned on the foothills of Mount Majura encompassing nature and greenery as well as its location to Majura Primary School, Rosary Primary School Australian Catholic University and nearby Dickson College are undoubtedly luring them in.

Image via Canberra Dog Walks 

Head towards Knox Street for a spruced up modern café/ restaurant called Knox – Made in Watson. This joint is everything it means to be a local as the owner is a born and bred Watson boy!

 

Buying a new home vs buying an established home

Buying a new home vs buying an established home? This is a question we constantly get asked, the truth is, there are advantages and disadvantages for both!

We’ve pulled together a list of what we love – and less than love – about purchasing an established home and purchasing a brand new home.

An Established Home

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Established homes tend to have an architectural beauty, charm and individuality about them – characteristics that are certainly difficult to find in brand new homes. They also bear a mature garden, which means there’s no need for costly landscaping, fence fitting or time spent nurturing a young, dependent garden.

Older homes are located in older suburbs, where the streets are lined with large, fully grown trees and established nature strips – a site that, in a new home, could take decades to come to fruition. Older homes also have larger blocks, meaning a bigger backyard and more space between your neighbours.

When purchasing a pre-loved home, buyers also tend to have more flexibility in their negotiating power on the price of the home. There’s also a good opportunity for savings/investment. However, if you’re lucky enough to save a bit on money buying an older home, it does beg the question – what do you need to spend money on to update or revote the house? Fixing up older homes can often be very costly. Renovations could range from simply replacing a toilet suite to needing an entire new kitchen. Then there is always the unknown, because you never really know what will need fixing (and the costs associated with it) until you move in.

Plus, there are a range of inspection and residential reports that you should get when buying an established home. These include building inspection reports, pest inspections etc, and range in cost.

A Brand New Home

Googong

There’s nothing like the luxury of moving into a brand new home. No maintenance or renovations are required because everything is brand spanking new; the paint is fresh; the floor is unscathed; and the kitchen and bathrooms are modern are functioning properly. There’s also the comfort of knowing that the products and components of your new home are still under manufacturer’s or builder’s warranty, so if something breaks you can get it fixed quickly and easily. And did we mention that new homes are guaranteed asbestos free?

The orientation of a new home is also likely to be much better compared with an older home. These days, houses are built to maximise sunlight in the right rooms at the right times of day. Not only does this boost the amount of natural light in your home, it also helps to ensure that you use your air conditioner less in summer and your heater less in winter, saving you money in the long run! New homes are also much more energy efficient than old homes. They use current, energy-saving materials, technology and appliances to reduce the impact on both the earth and your pocket.

While new suburbs tend to be in a more remote location, they are also better planned with nearby schools, shops, parks and other community and recreational facilities. Although, as mentioned above, it can take years for these suburbs to develop the natural beauty of an older suburb.

When purchasing a new home, buyers do not usually have much negotiating power on price and have less opportunity to for savings/investment. In saying this, if you’re an investment buyer, a new home can be quite appealing due to the depreciation benefits that can be transferred to tax benefits.

New homes also aren’t entirely complete just because the build has finished. There’s usually landscaping to be done, proper fences to be built and sometimes a driveway to be paved. Due to space restrictions, new homes are also built on smaller blocks, meaning they compensate the backyard to ensure a reasonably sized home. On the plus side, if you shop around, you should be able to find affordable, value-for-money house and land packages in a suburb to suit your needs!

Federal Government Announces First Home Super Saver Scheme

While the 2017 Federal Budget may seem boring, it contains an exciting benefit for first home buyers.

The First Home Super Saver Scheme will allow people to make additional contributions to their super and then withdraw a maximum of $30,000 for a deposit on their new property. The move is one of several steps the government has made in an attempt to help young people enter the property market.

The new scheme will allow first home buyers to withdraw amounts that have been contributed voluntarily over the 9.5% super guarantee. The threshold on voluntary contributions is $15,000 per year or $30,000 in total. The contributions will be taxed at a lower tax rate of 15% and will allow these people to withdraw not only those contributions, but also any earnings generated from those contributions at a rate 30% lower than the person’s marginal tax rate.

Many people have condemned the scheme, with worries about the repercussions of withdrawing from your retirement income, as well as the fact that super (which is heavily invested in growth assets, such as equities) can fall sharply in value. The scheme however, will not be available to everyone, rather it will be accessible by a relatively small band of first home buyers who have the luxury of being in a position to make voluntary super contributions through salary sacrifice arrangements.

In addition to the First Home Super Saver Scheme, the government has implemented other initiatives to help young people with their progress into the housing market. The budget introduced measures that allow people aged 65 or over to contribute up to $300,000 from the sale of their home directly into their super. This was implemented with the intention to free up housing in desirable areas by encouraging ageing residents to downsize.

Provisions have also been made in the budget to help reduce the pressure on the rental market. Foreign investors who have not made their properties available for rent for at least 6 months out of the year will face fines of $5,000 per property per year. This should hopefully increase the amount of properties available for renters.

Whether you choose to withdraw from your superannuation or not, the 2017 Federal Budget is a step in the right direction to help first home buyers and renters across Australia. More information on the 2017 Budget can be found at the links below.

Image via finder.com.au

References:

Kidman. A, May 10, 2017, Budget 2017: How will it help first home buyers?, https://www.finder.com.au/budget-2017-housing-affordability

Kirby. J, May 10, 2017, Budget 2017: changes to super rules kept to a minimum, http://www.theaustralian.com.au/budget-2017/budget-2017-changes-to-super-rules-kept-to-a-minimum/news-story/5856fdd99f5ffbfe80d3148fbad6912e

Patten. S, May 9, 2017, Budget 2017: First-home buyers can tap up to $30,000 of super savings, http://www.afr.com/personal-finance/superannuation-and-smsfs/budget-2017-firsthome-buyers-can-tap-up-to-30000-of-super-savings-20170507-gvzr7w

Power. T, May 10, 2017, 2017 Federal Budget summary: Superannuation and retirement measures, https://www.superguide.com.au/retirement-planning/2017-federal-budget-superannuation-retirement