What is Lenders Mortgage Insurance? What are the benefits of buying off the plan? What Government Assistance is available to First Home Buyers? What is the First Home Buyer Super Saver Scheme? What is Rentvesting? Why buying your first home is a good idea? What makes a great investment?
What is lenders Mortgage Insurance?
Put simply, Lender’s Mortgage Insurance (LMI) is insurance that protects the lender if, for some reason, you are unable to make your repayments.
LMI will generally be applied if you borrow more than 80% of the purchase price of your home, so it’s actually a good thing for First Home Buyers as it’s a way for you to obtain finance with a smaller deposit.
The cost of LMI will depend on how much deposit you have saved up, and the purchase price. A mortgage broker will be able to give you an estimate when you’re going through the process of obtaining pre-approval.
What are the benefits of buying off the plan?
An off the plan property can generally be secured with a 10% deposit at contract signing time. The balance of the purchase then doesn’t need to be paid until your home is complete, giving you additional time to save. There are plenty of other benefits as well, including:
- You’re more likely to qualify for Government Assistance
- There may be more tax depreciation on new properties
- Early purchasers will enjoy a greater selection of what’s available in a building that meets your criteria considering view, aspect and preferred floorplan
- Buying off the plan will generally involve an extended settlement period giving you more time to save and get prepared for moving into your new home!
As a first home buyer, is government assistance available to you?
Find out more: https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/new-homes
What is the First Home Buyer Super Saver Scheme?
The First Home Super Saver Scheme (FHSSS) allows First Home Buyers to make contributions into their Super, which can be released at a later date. You can withdraw up to $15,000 made in a financial year –the maximum amount that can be released is $30,000. To be eligible to make releases from super you must;
1. Be over 18 years old.
2. Never owned a property in Australia.
3. Not previously requested to issue a FHSS release.
4. You will then have 12 months from the date of the first released amount to sign a contract to purchase your home.
Find out more: https://www.ato.gov.au/general/new-legislation/in-detail/super/first-home-super-saving-scheme/
What is Rentvesting?
Rentvesting is the term for renting where you want to live, and purchasing an investment property where you can afford to buy. This is becoming increasingly popular with first home buyers, especially in Sydney and Melbourne where suburbs close to the CBD are priced out of reach for many. It allows you to continue living the lifestyle you love, while still getting onto the property ladder.
What makes a great investment?
Across Australia, there are consistent themes as to what drives choice of where and how people live. A great lifestyle, available jobs and housing affordability are all driving these choices. There’s generally a strong preference for the traditional, large family home, however increasingly people are making trade-offs and putting lifestyle ahead of space, to ensure they’re making the best purchase that suits the way they live.
Proximity to transport, shopping, cafes, education, and parks is important to weigh up and think about what you will need now and into the future. Generally, properties that are close to amenities such as these make for better investments long term.
Why is buying your first home a good idea?
It differs for everyone, and there are no guarantees with any investment. However as most of us are generally poor savers, it makes sense to invest your income in a way that benefits you the most – a roof over your head. Everyone needs to live somewhere, and being a long term renter is tough, especially if you have plans to grow your family in the future.
If you buy with a long term view, usually you can benefit from capital growth in your investment which then gives you a significant edge once you reach retirement age. You’re probably not thinking that far ahead, but it’s worth taking it into consideration to ensure you have all the information you need.
Finally, there’s nothing like the sense of pride that comes with owning your own home. After almost a century of creating homes and places for tens of thousands of Australians, experience tells us that what matters the most is the simple joy of living in a place you’re proud to call home.