Struggling to find a deposit for a house? Try out these top cost-cutting tips and make sure you take advantage of grants and tax breaks.
The Deposit Dilemma
It’s one of the most daunting questions facing any aspiring home-owner: how much deposit do I need to buy a house? Working out what you’ll have to put down initially as part of the deal you cut to finance your property purchase is complex enough, even before you start to work out how you’re going to find that money.
The good news is that help is available if you’re buying your first home. Government grants are available to those taking their first step up the property ladder, and from our experts here at Stockland, who specialise in supplying first-time buyers with new-build houses and land eligible for the various schemes available.
We caught up with Stockland Residential Chief Executive Officer Andrew Whitson, who shared his top tips for first home buyers looking to take full advantage of the grants and tax breaks on offer.
“Grants are available for newly built homes that have never been lived in, as well as for those who buy land and build,” says Andrew. “However in some states building a first home can save even more on transfer fee [stamp duty] concessions.”
If you think you could be eligible for a concession, it’s important to factor that into the calculations which determine what sort of deposit you think you’ll pay, Andrew says: “After checking the grants available in your state, doing some careful calculations can give a good indication of the amount of deposit.”
But we can’t all be property experts, of course, and to many first-time buyers these sums can seem demanding. Fortunately, there are plenty of tools out there to guide you through some of the more complex calculations. “Using online budget calculators and the loan guides available on bank websites can be useful tools to help you do this,” says Andrew.
Cost-cutting isn’t the only benefit of sorting a grant for your purchase – it may be able to help you secure a better deal from your bank, since larger deposits will often mean lower interest rates, according to My First Property Finance Director Geoff Wood.
If you’re not able to secure a grant or a handy tax concession, though, there are still plenty of options. A specialist broker may be able to negotiate you a competitive rate, says Geoff, even if your figure is close to the minimum deposit for a home loan.
According to Geoff: “There are some banks that charge the same rate whether they’re lending 80 per cent or 95 per cent of a property’s value, and that’s just one reason why it’s so important to have a licensed credit adviser working to get the best deal for you.”
If you’re not able to secure a grant or a handy tax concession, though, there are still plenty of options. A specialist broker may be able to negotiate you a competitive rate.
Once you’ve got a good idea of what sort of interest rate you can secure, you can begin to set your budget accordingly. But before you sign anything, it’s important to check for unanticipated fees and expenses, which can add thousands onto your deposit. “Conveyancing, bank fees and mortgage insurance can add up to well over $10,000,” says Geoff.
There’s also the question of how the value of your property might increase – or decrease – over the first few years after you first cross the threshold. If charting the likely fluctuations of the Australian property market isn’t your sort of thing, there’s nothing wrong with seeking professional advice.
As Geoff explains: “A typical loan term is 30 years, but the real outlook is three to five years because lifestyle needs change and people can consider new choices because their property’s value will probably have increased. Again, a licensed credit adviser can help with that.”
In many ways, finding a deposit for a house is the greatest hurdle you’ll face on your journey to home ownership. But by making the most of Government schemes to help you on your way, you’ll soon have a place to call your own.