Thoughts on becoming a First Time Homebuyer?
Buying a home is a significant milestone for many individuals, representing a step towards financial stability and personal achievement. For first-time homebuyers, the journey to homeownership often presents numerous financial challenges, with upfront costs such as stamp duty posing a substantial barrier.
In recognising these hurdles, let’s talk about what it’s like buying a house in 2024.
Governments frequently implement schemes and grants aimed at easing the financial burden for first-time buyers. One such initiative is the First Home Buyer Assistance Scheme, which offers relief on stamp duty costs for eligible individuals purchasing their first property.
So lets explore recent adjustments to grants and schemes, particularly focusing on changes made by the NSW government in response to the evolving real estate landscape. By examining these policy modifications, we’ll aim to understand how they impact first-time homebuyers and contribute to broader efforts to increase homeownership accessibility.
Stamp Duty Relief
Stamp duty, also known as transfer duty, often constitutes a significant upfront expense when purchasing a home, second only to the deposit. This expense can pose a substantial obstacle for first-time homebuyers.
The First Home Buyer Assistance Scheme offers a stamp duty discount or exemption to qualifying first home buyers for properties under a specific price threshold. Encouragingly, the NSW government made adjustments to this scheme last year, increasing the price threshold and thereby expanding the pool of properties eligible for a transfer duty exemption or concession.
Effective from 1 July 2023, eligible first home buyers now receive a stamp duty exemption for properties valued under $800,000, and a concessional rate for properties priced under $1,000,000.
Eligible first home buyers stand to save $30,735 in transfer duty costs, presenting a substantial financial relief for those making their first property purchase.
Lower Interest Rates: A Beacon of Hope
Relief on the Horizon!
Lowering interest rates could provide much-needed relief for first-time homebuyers, offering a glimmer of hope beyond government initiatives.
The recent surge in interest rates has placed significant strain on aspiring homeowners, with the RBA’s official cash rate skyrocketing from a mere 0.1% to 4.35% between May 2022 and early 2024.
Banks adjusted their interest rates accordingly, substantially increasing mortgage servicing costs and limiting borrowing capacity, particularly impacting first-time buyers who often lack existing equity and aim for entry-level properties with sizeable mortgages. With economists predicting a potential decrease in interest rates throughout 2024—some speculate a reduction of up to 0.65% by year’s end—prospects could soon brighten for first-time buyers.
Lets talk about Grants and Schemes
For eligible first-time homebuyers, a range of government grants and schemes are available to provide assistance. These initiatives encompass:
1. First Home Owner (New Homes) Grant: This grant offers $10,000 to first home buyers who are purchasing or constructing a brand new home valued at $750,000 or less.
2. First Home Super Saver Scheme: Designed to bolster savings, this scheme enables first home buyers to enhance their deposit within their superannuation fund, potentially qualifying for tax benefits.
3. First Home Guarantee Scheme: Simplifying entry into homeownership, this scheme facilitates borrowing up to 95% of a property’s value for first home buyers, without the need for costly lenders mortgage insurance.
4. First Home Loan Deposit Scheme: Enabling home purchases with a minimal deposit of just 5%, as opposed to the standard 20%, this scheme eliminates the necessity for lenders mortgage insurance. Operated by the National Housing Finance and Investment Corporation (NHFIC), the scheme provides government-backed guarantees for up to 15% of the property’s value, subject to income and property thresholds.
These diverse grants and schemes cater to the varied needs and circumstances of first-time buyers, aiming to alleviate financial constraints and enhance accessibility to homeownership opportunities.
We know reading information about buying a home can be overwhelming, there is so much to consider and weigh to see what works for you best.
Have a chat with us.
Rhoda Barsalli.