Tips for First Home Buyers with FOMO

How first home buyers can overcome the fear of missing out (FOMO) factor.

12 October 2021|5 minute read

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Entering the housing market is hard enough for most Australians, but even more so for first home buyers in 2021. Almost 91% of first home buyers say housing affordability remains their key concern, particularly during the pandemic.

So now, buyers have FOMO – fear of missing out – and are holding their breath trying to decide whether it’s the right time to enter the market. For some, there’s a sense of urgency when it comes to buying so that they can take advantage of lower interest rates, or limited-time buyer assistance schemes.

The question of whether to buy today, tomorrow, a year from now, or whether buying at all is even worth it, weighs on the minds of almost every prospective buyer. It can feel discouraging when house prices continue to skyrocket and saving up for your first deposit seems like a never-ending battle.

Breathe! We have good news.

Even though the struggle is real, there are many financial benefits available to help you get started building your future today before affordability conditions shift tomorrow.

Here are some incentives to help you overcome your FOMO and have a chat with your local Aussie broker.

Are there any government incentives for First Home Buyers?

Simply put, yes! There are a number of government-led incentives aimed at helping first home buyers get onto the property ladder ASAP. Here is an overview of the main schemes to keep an eye out for:

1. First Home Super Saver Scheme

As part of the 2021-22 Budget, the Federal Government raised the First Home Super Saver Scheme limit from $30,000 to $50,000. This scheme allows first home buyers to make deposits to their super accounts for withdrawal later to buy an owner-occupied home.

First home buyers can make voluntary concessional (taxed at a discounted rate of 15%) and non-concessional (already taxed at your marginal rate) contributions into their super fund which can later be withdrawn and put towards a deposit on their first home.

2. First Home Owner Grant

There are various nation-wide iterations of this grant aimed at helping first home buyers build their deposit. The size of the First Home Owner Grant varies between states and territories, and is no longer available in the ACT. However, in states where it is available, it ranges from about $10,000 to $20,000. In most locations, this won’t be enough to cover a deposit, but it can certainly make a difference.

Like all government schemes, there are criteria that applicants must meet. This varies between states, but there are some commonalities:

  • You must be a first time buyer who is an Australian citizen or permanent resident aged 18 and above
  •  property has to be a new build
  • There are property price thresholds imposed (i.e. you are only eligible for the grant for properties under a certain price cap)
  • The property must be your principal place of residence for a specified minimum period of time.

3. First Home Loan Deposit Scheme (FHLDS)

Another way that the government is helping first home buyers enter the housing market sooner is through the First Home Loan Deposit Scheme (FHLDS). The FHLDS helps eligible first home buyers purchase a home with a low deposit. If you’re eligible, you’ll only need a deposit of between 5% and 20% of the property purchase price and won’t be subject to Lenders Mortgage Insurance (LMI).

There are income requirements as part of the eligibility criteria for this scheme:

Singles: your taxable income should not exceed $125,000 per year
Couples: your combined taxable income should not exceed $200,000 per year

As with most other schemes, the FHLDS only applies to owner occupiers, not property investors.

4. Stamp duty concessions

Stamp duty, or transfer duty, will very likely be the largest immediate cost that comes with buying your first home (or your second, third or fourth!). Unless you’re eligible for concessions or an exemption, stamp duty is charged for every property you purchase. Stamp duty is affected by the following factors:

  • The property value/sale cost
  • Property location
  • Property type (e.g. owner occupied, investment property, house, apartment etc.)
  • If you are a first home buyer
  • If you are a foreign buyer.

Luckily in some states, eligible first home buyers can get concessions or be fully exempt from paying stamp duty. These concessions vary between states and territories, but usually have a property price cap associated with them.

Try our Stamp Duty Calculator to work out how much you may be able to save with concessions or how much you may need to put aside.

 


 

Is now the right time to get into the property market?

There’s really no perfect time to buy a home. It all depends on your financial circumstances and situation - it needs to be the right time for you. Research from CoreLogic has indicated that although the pandemic has negatively impacted consumer sentiment towards buying, Aussie confidence in the market has been fairly resilient.

Taking advantage of lower interest rates

Current market interest rates are among the lowest we’ve ever seen. Buyers can now enjoy a welcome combination of record low rates in a competitive lending market - with the official cash rate remaining unchanged at record low level of 0.10% since November 2020. Schemes and concessions are flowing through to help home buyers take the next step.

 


 

More tips for getting on the property ladder

1. Consider rent-vesting

If you’re currently renting in an expensive but ideal area that you can’t afford to buy in, rent-vesting might be one way you can enter the property market. This is an investment strategy that involves buying a rental property in an area you can afford, while continuing to live and rent in your preferred suburb.

In addition to providing rental income, owning an investment property can come with a number of tax advantages. Plus, if the investment property increases in value over the years, you could sell it at a profit and buy in your preferred location. Or, you could dip into the property’s equity to fund a deposit.

2. Research and compare lenders

If you’re in a good financial position to buy, but haven’t quite saved up a 20% deposit, there are still many lenders who might consider financing your home loan. Plus, if your application is good enough, certain lenders might even let you avoid paying Lenders Mortgage Insurance (LMI) on deposits as low as 15%. Speak to your local broker to see which lenders might consider low deposit borrowers.

3. Guarantor home loans

Desperate to buy but don’t have a big enough deposit saved? One option might be to consider a guarantor home loan. A guarantor loan involves a third party (usually a parent or close relative) using their own home equity to secure a mortgage for the prospective buyer.

Bear in mind that if you default on your home loan repayments, your guarantor will be required to pay. Guarantors can be taken off the loan once the guaranteed value has been repaid.

4. Get a clearer view of where you can buy with Aussie’s Suburb Spotter tool

Part of preparing to buy a property is researching where you can actually afford. Once you’ve found a suburb or region that meets your criteria and you can afford, it really narrows down the property search. If you’re open to property investment, you can even consider areas further from where you live and can hire a property manager to deal with the rental.

Aussie has developed a Suburb Spotter tool that features an interactive map to help you find out where you could buy. You can filter down your options based on your deposit size and preference for a house or unit. Try it out today!

5. Speak with your local mortgage broker

Buying your first home will be an intimidating prospect for most Australians, but it’s important not to get wrapped up in what other buyers are doing and make decisions that suit your circumstances.

Brokers can take the hassle and complexity out of the home loan process and help you find a good home loan deal. Even if you’re not ready to buy yet but are still experiencing that sense of FOMO, a broker can help you understand how to reach your property goals

Connect with an Aussie Broker

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