With the $5,000 bonus to the Queensland First Home Owners’ Grant ending on June 30, now’s the time to get serious if you want to claim the extra money. To help you prepare to buy your first home, we have answered the top questions asked by first home buyers. From saving for a deposit to using a mortgage broker and understanding the settlement process, here are the basics you need to know.
1. How do I know if I am eligible for the Queensland First Home Owners’ Grant?
To be eligible for the Queensland First Home Owners’ Grant, you must be purchasing or building a brand new home that is valued at less than $750,000. You must also be an Australian citizen and buying property for the first time.
Until June 30, 2017, the grant has been increased from $15,000 to $20,000. So if you sign a contract on a new property before this time, you will be eligible for the $5,000 bonus. That’s a tidy sum that can really help out when you are trying to save for a home.
2. How much do I need to save for a home deposit?
Saving a deposit is one of the biggest challenges of purchasing a first home. For owner-occupier loans, some lenders will accept a deposit as low as 5% – though you should be aware that if you have a deposit of less than 20%, a lenders’ mortgage insurance (LMI) premium will be added to your loan. When purchasing your first home, you can use the Queensland First Home Owners’ Grant to contribute to your overall deposit.
3. What are the extra costs of purchasing a home?
When you purchase a new home, it is important to budget for the extra costs associated with buying property. These costs do add up quickly, so it pays to have a realistic budget in place. Costs you will need to pay include:
- Home loan establishment fees
- Legal fees for conveyancing
- Moving costs
- Transfer duty
- Utility connection fees
- New furniture and appliances
- Pest and building inspections
The biggest expense in this list is transfer duty (commonly referred to as stamp duty), however first home buyers do receive a concession on this. If you are purchasing a home valued at less than $500,000, you will not be required to pay any transfer duty. First home buyers purchasing a home valued between $500,00–550,000 will receive a concession. This Queensland Government calculator will help you to determine if you need to pay transfer duty and how much it will cost.
4. Should I use a mortgage broker to arrange my home loan?
Finding the right home can be an overwhelming process, as there is a lot of financial jargon to get your head around and a number of lenders to choose from. A mortgage broker can make this process easier for you by comparing loans, explaining different home loan features and managing the application process.
Whether you use a mortgage broker depends upon how comfortable you feel researching and applying for a home loan yourself. Mortgage brokers are paid a commission for each loan they settle, which means that many offer a free service. If you are concerned that a broker is pushing you towards a certain product, be sure to shop around so you understand your options.
5. What do body corporate fees cover?
If you are purchasing an apartment or townhouse, it is likely you will be required to pay a body corporate or strata levy each quarter. A body corporate maintains common property such as communal areas and the exterior of a building, and also manages things such as insurance.
Your levy is used to administer the body corporate and to perform maintenance and improvements. How much you pay depends upon a number of factors, including the types of facilities within the complex and the number of residences.
6. How long does settlement take?
Property settlement is the legal process that takes place after you sign a contract for a property. This process transfers ownership from the current owner to the buyer. Settlement periods are typically between four and six weeks, however this can vary depending upon what you arrange with the seller.
If you are purchasing a property off the plan, the settlement period can be anywhere up to 18 months. This suits many first home buyers, as the long settlement gives them more time to continue saving for their home after agreeing to a purchase price.
For more information on the Queensland First Home Owners’ Grant and to learn more about what to expect when buying your first home, come along to talk to our sales team at the Cornerstone Living Sales Office. When you have the right information, you will feel more confident as a buyer.