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First Home Buyers FAQs1. What Entitlements Am I Eligible For as a First Home Buyer?Your entitlements will vary depending on:
Under the First Home Owner Grant (FHOG), a once-off payment of up to $7000 is payable to first home owners that satisfy all the eligibility criteria. Note: some states/territories have introduced a cap where first home buyers purchasing a property above this will not qualify to receive the grant. In NSW, this is currently $835,000. The government has established a website with all the relevant grants and schemes - www.firsthome.gov.au 2. How Much Deposit Do I Need?Generally speaking, a deposit of 20% of the value of the property will save you from incurring additional fees such as Lender's Mortgage Insurance. Some lenders will let you borrow up to 95% of the purchase price and then let you borrow the cost of the Lender's Mortgage Insurance on top of that. Alternatively, if you don't have a deposit, you can borrow up to 100% of the property's purchase price, in two ways:
3. What is Lender's Mortgage Insurance?Lender's Mortgage Insurance, as the name states, protects the Lender not you as the borrower. Lender's Mortgage Insurance (LMI) is a once off fee that normally applies to loans where the customer is borrowing more than 80% of the purchase price. LMI is scaled depending on the percentage you need to borrow (between 80 - 100%) and the amount of the loan (ie, $650,000). LMI can start from $800 and range up to nearly 4% of the loan amount. You have two options to pay this fee. 1. You can pay it upfront on settlement of the loan. 2. Some lenders allow you to capitalise the cost of your LMI, meaning that they will add this figure to your loan amount. For example, if you are borrowing $650,000, your LMI may work out to be $7000. You would actually increase your loan amount to now borrow $657,000 ($650,000 + $7,000). 4. What are My Options in Raising the Deposit?The most obvious, tried and test method is write a budget and stick to it. Using a Budget Planner is a great place to start.
5. I have been Pre-Approved - What Does this Mean?This means that a quick check on your serviceability of a loan has been done and it is calculated that you should be able to make mortgage repayments on the amount you have been pre approved for. However, it is not binding and cannot be used to make an offer on a property. It is important to get a full or unconditional approval before proceeding with any property purchase. This involves completing a home loan application and providing all the necessary supporting documentation. (See our home loan application checklist) 6. How much are the fees for establishing a loan?Below is a table of typical fees that may apply to a home loan of $350K. However, there are No Fee Home Loans that eliminates a large number of these fees.
7. What Other Costs Should I Account for When Purchasing a Property?There are costs are associated with the establishment of the loan, as per the table above. In addition to these, you may be subject to:
8. What Documents Do I need to gather to apply for a loan?You can view and print off your Loan Application Documentation Checklist here. 9. How do I apply for the FHOG?Your friendly Mortgage House Lending Specialist can assist you with this at the time of your home loan application. Where to go from here:
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