FIRST HOME OWNER LOANS AND MAY-2017 FEDERAL BUDGET UPDATE AND MAY WA STATE BUDGET UPDATE
If you are thinking of buying a home and reading this, you have already completed the first step to making sure you are getting the right information. At Orange we will help you make your decision about which First Home Owner Loans will be right for you. There are hundreds of different home loan products and choices available in the market. This can be a little confusing especially went some of them aren’t suitable as first home owner loans.
At Orange, we sift through all these different products, we explain all the jargon, and we’ll make sure you get all the information you need to make the right choice. And the best thing is, we’ll manage the entire process for you from application to settlement and we won’t charge you a fee for our service. (Refer to How We Operate).
A lot of people think it is difficult to obtain finance from a bank, but this is not quite right. If you are employed and have enough savings, chances are, you will meet some banks’ lending criteria for a home loan. First home owner loans have similar features to “normal” loans. Chances are you probably won’t need all the bells and whistles and getting the lowest rate possible is the most important thing.
FIRST HOME OWNERS GRANT AND STAMP DUTY CONCESSION FOR WA PURCHASES
If you are buying your first home, you should be aware that you may be eligible for the $15,000 First Home Owners Grant ($10,000 First Home Owners Grant and a $5,000 First Home Owners Boost only until 1-July-2017) for buying a newly constructed home or building your own home. As of the May 2015 the WA State Budget removed the $3,000 First Home owners grant to purchase an already established property.
As part of the WA May-2017 State budget, the government has removed the $5,000 First Home Owners Boost from 1-July-2017.
If you buy a land for under $300,000 and build, you may be eligible for the stamp duty concession which would save you $10,165 in stamp duty. The combination of the stamp duty concession and the First Home Owners Grant could save you $25,165 if you qualify.
To qualify for the grant, you need to satisfy the following;
- You must be a Natural persons i.e. not buying via a company or a trust.
- At least one of the applicants must be an Australian Citizen or PR.
- Applicants and/or spouse must not:
- Have previously received a grant under this scheme.
- Owned residential property anywhere in Australia prior to 1-July-2000.
- Previously purchased and occupied property in Australia as a place of residence on or after 1 July 2000.
- Must occupy the residence for a continuous period of 6 months commencing within 12 months of settlement.
- A contract made on or after 1 July 2000 for the purchase of a home;
- In the case of an owner builder, building work on the home commenced on or after 1 July 2000.
- After 1 January 2010, the total value of the property (i.e. total value of the home and land) must not exceed $750,000 if the home is located south of the 26th parallel or $1,000,000 if the home is located north of the 26th parallel.
STAMP DUTY CONCESSION
The Office of State Revenue Stamp Duty concessions mean that if you are a first home owner you don’t need to pay stamp duty for established houses less than $430,000 or vacant land valued less than $300,000. There are reduced stamp duty amounts for houses valued between $430,000 and $530,000, and also for vacant land valued between $300,000 and $400,000. Refer to http://www.finance.wa.gov.au for more information.
Note there has been a recent budget change so these figures are likely to change soon.
SOME OTHER THINGS FIRST HOME OWNERS SHOULD KNOW
- Banks want to see 5% in savings to be used for the property. This means they require you to have at least $20,000 in savings means if you are buying a house for $400,000.
- If you have less than a 20% deposit for a house, you will be required to pay Lenders Mortgage Insurance( LMI). There are ways of reducing the need for LMI but required parental guarantees.
MAY-2017 FEDERAL BUDGET UPDATE FOR FIRST HOME OWNER LOANS
From 1-July-2017, there is a new plan to help first home buyers save for their deposit to buy their first home. The way it works is that first home savers can salary sacrifice to a total of $30,000 into their super (to a maximum of $15,000 per year). As a couple, this means the total can be $60,000 which can be a significant deposit in Perth reducing the LVR and hence LMI costs. Considering the average home in Perth is circa $475,000, the LVR will then be under 90% which have significantly lower LMI costs than above 90%.
The benefit of this package is that lower taxes are applied to the salary sacrifice at currently 15.0% rather than at the marginal tax rate. For most people, their marginal tax rates are between 32.5% and 37% so they should be able to save quicker using this structure.