First home buyers may feel like the great Australian dream of owning a home may seem like it is slipping beyond their reach, but it doesn’t have to be, says Adelaide mortgage broker Hayley Walsh.

The property boom coupled with rapidly rising interest rates will have many first home buyers second guessing their plans.

But there are tips, tools and mechanisms that you can use to make your goal that little bit easier.

And with so many hurdles to jump to own your little piece of South Australia, it’s never been more important for potential first-home buyers to use everything at their disposal to turn that dream into a reality.

Home Guarantee Scheme

The Labor Government has made good on its election promise and from July 1 2022, implemented its Home Guarantee Scheme.

Formerly known as the First Home Loan Deposit Scheme, it will assist up to 40,000 Australians, raising their potential buy in most Australian cities by as much as $100,000.

The scheme is divided into two parts.

First Home Guarantee – This gives 35,000 first home buyers the opportunity to purchase a new or existing home with as little as a 5% deposit, down from the traditional level of 20%.

Family Home Guarantee – This will give another 5,000 single parents the chance to enter or re-enter the property market with as little as a 2% deposit.

In Adelaide, the property price cap for the First Home Guarantee and the Family Home Guarantee has been raised by $100,000 to a maximum of $600,000.

While outside the capital, the cap has been raised by $100,000 to $450,000.

Both the First Home and Family Home Guarantees will also allow borrowers to avoid paying Lenders Mortgage Insurance (LMI) which can add significant costs to anyone who takes out a mortgage with deposits less than 20%.

Help to Buy Scheme

Also part of Labor’s plan to make housing more affordable is its Help to Buy Scheme which is expected to be available from early next year.

The scheme will allow up to 10,000 Australian first home buyers to get into the market with as little as a 2% deposit, while again avoiding costly Lenders Mortgage Insurance.

The government will pay up to 30% of the purchase price for existing homes and up to 40% for new homes.

It is a shared equity scheme that will see the government own part of your home, until you pay it back.

The qualification rules are expected to be as follows:

  • You will need to be an Australian citizen, 18 years or older
  • Your maximum earnings cannot be higher than $90,000 or $120,000 for a couple
  • You must reside in the property for at least 12 months
  • It must be a first home purchase. You cannot have previously owned any land or property.
  • You must pay stamp duty and all other associated costs as well as be approved for a home loan by a lender
  • You must buy within the price cap for your region

The price cap for Adelaide is $550,000 and $400,000 for the remainder of South Australia.

First home owner grants

Every state has a first home-owner grant in place and South Australia is no different.

A grant of up to $15,000 is available on the purchase or construction of a new residential home.

The eligibility requirements are:

  • It must be a new home that has not been previously occupied or sold
  • The value of the property must not exceed $575,000
  • At least one applicant must be an Australian citizen or permanent resident (NZ citizens permanently residing in Australia with Special Category Visas may also apply)
  • Each applicant must be at least 18 years of age
  • Neither applicant may have owned any residential property in Australia prior to 1 July 2000
  • Neither applicant may have resided in a residential property in Australia that they owned for six months or longer after 1 July 2000
  • Both applicants must reside in the home they purchase as their principal place of residence for at least six months, starting from 12 months from the date of settlement or the date construction is completed.
  • Companies and trusts are ineligible for the first home owner grant

Before you apply for anything

It’s worthwhile running through a basic checklist before you apply for any home loan or concession scheme.

You’ll need to be at least 18 years old with a regular income as well as be a permanent resident of Australia to qualify.

Here’s what is also worth considering:

Affordability  – Calculate how much you can afford to borrow and hence how much you can afford to spend on a house. 

Don’t forget the add-ons like your deposit, stamp duty, Lenders Mortgage Insurance and other fees and charges associated with opening a loan.

The average home loan in South Australia is $463,127. That lies about $19,000 below the national average.

Credit score – If you have defaulted on any payments, be it your credit card, Afterpay or whatever, you’ve hit an early snag. It’s wise to pay off any existing debts before you apply for a home loan.

Some institutions will lend money to people with a chequered credit history but you are certain to attract a higher interest rate. 

If you are worried about your credit score, you can order a free copy here.

Book professional inspections – When you’ve found your dream home, book building and pest inspections to ensure you don’t buy a lemon that will end up costing you potentially hundreds of thousands of dollars more.

Apply for pre-approval – This won’t ensure you get the loan or the house you want, but will allow you to inspect properties and attend auctions with confidence, knowing you are in a position to buy and knowing exactly how much you have to spend.

First home buyers can get support today

Buying your first home will be the biggest investment of your life to date.

It can be exhilarating but it can also be extremely intimidating.

Calder Finance Broking are experts in the business and can take all of the stress and anxiety out of the process, as well as help you make a sensible purchase you can afford with no hidden surprises.

We can help you with pre-approval and will also ensure you are on the very best loan deal available.

We pride ourselves on leading our clients into the future with structure, financial stability and confidence. 

Contact us today to get started or discuss all of your finance needs and concerns.

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.

Written by Hayley Walsh from Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.

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