With the latest announcement by NSW government on stamp duty relieve for brand new homes up to $800K – this is now truly THE perfect storm for all the NSW First Home Buyers!
As we all know the biggest hurdle for First Home Buyers (FHBs) to get into their first home are
1. Saving for a sizeable deposit, and;
2. High stamp duty barrier (so even more deposit/saving is required)
Well, not anymore! Thanks to the latest stamp duty relief announcement by NSW government, plus all the incentives provided by Morrison government at the federal level, what this means:
1. Saving for a sizeable deposit – First Home Loan Deposit Scheme (FHLDS) now takes care of this issue allowing first home buyers to get in as little as ONLY 5% deposit while the rest can be warranted by government! In addition Lender Mortgage Insurance (LMI) is now waived!
2. High stamp duty barrier – for existing property the threshold remained the same – no stamp duty up to $650K and discount all the way up to $800K. However, for brand new properties this is now fully waived up to $800K purchase price and reduced all the way to $1M! Note stamp duty for $800K home is about $31K
In addition – if you’re building a brand new home then you may also be eligible for the $10K first home owners grant (FHOG) as long as land + building value isn’t over $750K! Oh and don’t forget to factor in the latest HomeBuilder grant too as that’ll give you another $25K!
So what does this all mean!!!???
Let’s assume you’re building a $700K brand new home today in NSW. Now let’s see what incentives can be applied:
1. 15% deposit can now be waived via FHLDS – potential saving of $105000!
2. No stamp duty via the stamp duty relief – potential saving of $11000!
These 2 incentives alone are now saving you a massive $116000 – the usual 2 biggest expense in purchasing a home!! Just imagine how long it’ll take to save $116000…
Oh but the music doesn’t stop there for those who are building a brand new home – let’s continue:
3. If you’re building brand new with land & house value up to $750K then FHOG can be applied – $10000 in pocket!
4. Plus latest building grant via HomeBuilder – another $25000 in pocket!
So not only government is taking care of initial deposit and stamp duty, they’re also giving you another $35K to help with your deposit!
So how much total deposit is required?
Let’s see – because government allows you to buy your first home for as little as 5% deposit so that means you’ll need $35000. But dont’ forget, they’re also giving you $35K from FHOG and HomeBuilder, so that means $37500 – $35000 = $0!!
So technically speaking you can purchase your first home for as little as 5% and government will give that 5% back to you via grant…so you’re buying your first home with NO MONEY DOWN!! isn’t that amazing!!!
Of course you still need to satisfy the lending criteria and be able to borrow that much, but truth to be told I don’t think I’ve ever seen this amount of incentives being thrown at first home buyers to help them getting into the property market!
Now $700K may be good for other parts of NSW but not so good for metropolitan areas like Sydney, so for those of us who are living in Sydney you can apply the same logic to purchasing a brand new apartment – as long as it’s up to $700K purchase price and eliglbe for FHLDS then this strategy will work too! 15% deposit will be guaranteed by government and no stamp duty for brand new apartments up to $700K, hence all you need to pay is the 5% – $35,000. Now that’s a lot more achievable isn’t it?
So now government has taken care of the deposit required for you, the other side of equation is to ensure you can borrow up to the amount you need from the banks in order to get into your first dream home! This is where an experienced mortgage broker will be able to help you to tick the other side of equation. Keen to find out more? Feel free to reach out to us via the contact form to see how we’re able to help get into your first home TODAY!
P.S. these are the links to the information/incentives outlined in this blog article for those interested for further reading:
- First Home Loan deposit Scheme (FHLDS) – https://www.nhfic.gov.au/what-we-do/fhlds/
- Stamp duty relief for first home buyers purchasing brand new home – https://www.smh.com.au/politics/nsw/stamp-duty-paused-for-nsw-first-home-buyers-to-boost-construction-20200727-p55fpp.html
- First Home Owners Grant (NSW) – https://www.revenue.nsw.gov.au/grants-schemes/previous-schemes/first-home-owner-grant
- HomeBuilder – https://treasury.gov.au/coronavirus/homebuilder