If you’re a first home buyer in Melbourne, you’re likely seeking information on finance options and government grants you may be eligible for. Buying your first home is an exciting time, but it can also be confusing for first timers.
This article is a guide for first-time home buyers in Melbourne. It walks you through the first home buyers grant in Melbourne, how to navigate the housing market, and tips on securing a home loan.
- What grants can first home buyers get in Melbourne?
- How to navigate Melbourne’s housing market
- The basics of getting a home loan
What grants can first home buyers get in Melbourne?
Let’s look at some grants and concessions you may be eligible for as a first time home buyer.
1. First Home Owners’ Grant
This is a government grant to the value of $10,000. The First Home Owners’ Grant (FHOG) is available when you build or buy your first home. Eligible properties include a stand-alone house, a townhouse, or an apartment. Investment properties and holiday homes don’t qualify.
There’s a ceiling on the price of the home. The grant is only available for properties that cost $750,000 or less. You must be over 18 and occupy the home as your principal place of residence to receive the grant.
2. First home buyer stamp duty exemption
All home purchases attract a stamp duty tax. However, as a first home buyer, you are exempt and don’t have to pay any stamp duty.
The property must be $600,000 or less to qualify for the stamp duty exemption. This will save you over $30,000. If the property is above this price but no higher than $750,000, then you’ll pay stamp duty on a sliding scale dependent on the property’s price.
3. First Home Guarantee
This is a Federal Government scheme that offsets the deposit for your first home. As most lenders require a deposit of 20%, the Federal Government is offering to cover 15% of the deposit, leaving you to come up with only 5%.
Get a mortgage pre-approval with Lend & Co
A mortgage pre-approval gives you an idea of how much you may be able to borrow for your first home. This allows you to start house hunting with some confidence, knowing there’s a good chance your lender will approve your home loan application. Note that a pre-approval is an approval in principle only, and does not guarantee home loan approval. You still need to meet lending criteria, which includes your current financial situation, your credit score, and other factors.
Apply for a home loan preapproval with Lend & Co. We make the process streamlined and fast. You can access our preapproval form here.
How to navigate Melbourne’s housing market
- The Melbourne housing market is competitive, and you need to consider changing economic conditions and varying property types. It’s important to research the current market, as housing prices fluctuate depending on interest rates, population growth, and the economy. Regularly visit property market websites and view reports from reliable sites like the Australian Bureau of Statistics.
- Next, set a budget for how much you can afford to spend on your first home. Remember, if you want to be eligible for the First Home Owner’s Grant, the home must be $750k or less. Some things to factor into your budget are your deposit, how much borrowing power you have, and what the potential mortgage repayments will be. Also, factor in legal fees and moving costs.
- Now that you have a figure in mind, you need to decide what part of the city you would like to live in, and whether you can afford a home in that area. Melbourne is diverse and so are the property prices. Some suburbs are affordable while other areas are very expensive. Take some time to do thorough research on this. Consider proximity to amenities like schools, shopping centres and hospitals, and try to pick a location that has growth potential.
- You can also go online, visiting useful real estate web Not only can you shop for your first home on some ofthese sites, but they are also very useful for researching property prices in particular locations. Here’s a list of useful links:
- https://www.domain.com.au/
- https://reiv.com.au/market-insights/all-suburbs
- https://www.realestate.com.au/
- https://www.property.com.au/
- Consider enlisting the help of a buyer’s agent when searching for a home. Attend open home inspections and always be willing to voice any questions or concerns. Real estate agents offer great insight into the industry and current market trends. Having an agent on your team will make it easier to locate the right home for you, in an area you like, and at a price you can afford.
The basics of getting a home loan
When you’ve found your dream home, it’s time to arrange your mortgage. There are many banks and lenders to choose from, along with a variety of home loan types. An initial place to start is to do some preliminary number crunching yourself with some of our very useful calculators. These calculators help you to estimate things like your borrowing power, loan repayments and more.
Types of home loans
Variable rate home loan: With this type of loan, the interest rate fluctuates according to your lender, market conditions, and the interest rate set by the RBA.
Fixed rate home loan: This home loan allows you to lock in a fixed rate of interest for 1 to 5 years.
Basic home loan: This is a simple, no frills home loan. Typically, they are low interest, low fee, variable rate home loans with little to no other features.
Split rate home loan: Similar to the fixed rate loan, this home loan allows you to take out part of your loan on a variable interest rate, and the other portion on a fixed rate. Typical splits are 60:40 or 75:25.
The home loan application process
The process of applying for a home loan can be lengthy, and can seem a little complicated. Here are the common steps we help with:
- Completing all the required documents
- Comparing lenders current home loans and rates for the most suitable ones
- Submitting your documents for a preliminary assessment with the lender we think is most appropriate for you
- If you meet their criteria, we will lodge your full application
- If not, we’ll start the process again with another lender
- The lender undertakes a property evaluation and makes a decision on your application
- They send you an offer – which includes rates and terms
- Once agreed by both parties, the funds are made available to your solicitor or conveyancer on settlement day to complete the payments.
Home loan requirements
It’s useful to understand what lenders are looking for when it comes to home loans for first time buyers. This will help you to determine if you are ready or have more to do. Here’s what a lender typically wants:
- A deposit of at least 20% (or 5% plus a 15% subsidy from the First Home Guarantee scheme)
- A good credit score and credit history
- A stable income
- No or low debts
- Photo ID
- Payslips and bank statements
- Other documents such as the First Home Buyer Grant
Get a fast pre-approval home loan with Lend & Co
If you are looking to purchase your first home in Melbourne, we’re here to help. We can even help with the home loan pre-approval process, so you can start shopping for a home sooner. Once you find a home, we can help you with applying for grants or subsidies and with submitting your home loan application. Contact us today and discover how we can assist you.
