Buying your first home in Traralgon works best when you take the steps in the right order. Work out your budget first, then check what Victoria and the Commonwealth offer, then get a pre-approval before you make any offers. Get these steps out of order and you can end up bidding on a place you can't finance.
How Long Does It Take to Buy Your First Home?
Most of the time goes into saving the deposit. Once you have it, the steps from pre-approval to settlement are shorter, but how long they take depends on your lender and the contract you sign.
For a first home buyer in Traralgon, the usual order looks like this:
- Set a budget and test your repayments.
- Check grants, stamp duty concessions and deposit schemes.
- Apply for a pre-approval.
- Find a property, make an offer and sign the contract.
- Complete the formal home loan application, arrange insurance and settle.
If you want to talk through where you sit on this list, our Traralgon mortgage broker team can help you work out the starting point.
Set a First Home Buyer Budget That You Can Live With
Your budget is the repayment you can carry comfortably, not the maximum a lender will offer. Lenders assess what you could borrow, but you still need room for rates, insurance, repairs and the odd bad month.
As an example, consider a Traralgon couple who work out they could borrow $500,000. Using an illustrative rate of 6.75% p.a. over 30 years, the repayment is about $3,243 a month. That is an example only, and the rate you are offered will depend on your lender and deposit size. The couple set aside that monthly amount for a few months to test it and found it too tight. They dropped their target loan to $450,000, where the same illustrative rate gives about $2,919 a month. They then searched with a lower ceiling and a buffer in the bank.
The trade-off is a smaller property range. You can check your own numbers with the mortgage repayment calculator and see what a lender may allow on our borrowing capacity page.
Victorian First Home Buyer Grants and Stamp Duty Concessions
Victoria offers a $10,000 first home owner grant for new homes only, and a stamp duty exemption or concession on established homes, new homes and vacant land. Rules can change, so confirm the current details with the State Revenue Office Victoria before you sign.
The grant applies to new homes that have never been sold or lived in, with a dutiable value up to $750,000. It does not apply to established homes. On stamp duty, a first home buyer pays no land transfer duty up to a dutiable value of $600,000. A concession applies above $600,000 up to $750,000, and standard rates apply above that. In both cases you need to live in the home for at least 12 months, starting within 12 months of settlement. A new home that comes with the grant and the duty saving can look attractive, but you may be buying further from established streets, and you must meet the occupancy rule.
Ready to get started?
Contact a Finance & Mortgage Broker at Jason Low Mortgage Broking today.
Low Deposit Options: 5% Deposit Scheme, Help to Buy and Super Saver
A first home buyer can buy with as little as a 5% deposit under the Australian Government's 5% Deposit Scheme, or use Help to Buy to share equity with the government. Each has limits, so pick the one that fits your income, price range and plans.
Under the 5% Deposit Scheme, the government backs part of your loan, so you do not pay Lenders Mortgage Insurance (LMI). There are no income caps, but the purchase price and the lender's valuation must both be at or below the price cap. In Victoria the 5% Deposit Scheme cap is $950,000 for Melbourne and Geelong and $650,000 for other areas. Traralgon is an 'other' area, so the $650,000 cap is likely to apply. Check the exact suburb and postcode in Housing Australia's postcode search tool. You must move in within six months of settlement. The backing protects the lender, not you, and if you do not move in on time, the lender may ask you to pay LMI.
Help to Buy works differently. The government contributes between 5% and 30% of an existing home's price, or up to 40% for a new home, and you need at least 2% from your own savings. Income limits apply from 1 July. For this financial year they are $103,000 for a single applicant and $165,000 for joint applicants. You do not pay rent or interest on the government's share, but it takes a share of any sale proceeds, and you may be asked to buy it back if your income stays above the limit. You cannot combine it with the 5% Deposit Scheme.
The First Home Super Saver scheme can help you build the deposit. You make voluntary super contributions, up to $15,000 a year and $50,000 in total, then ask the ATO to release them. You must request the determination before you own property, and the release usually takes 15 to 20 business days. Tax applies to part of the amount released, so speak to your accountant before you start.
The scheme you choose shapes the lenders you can use, so it is worth reading through our first home buyers page and the home loans options before you commit.
Get Pre-Approval Before You Make an Offer
A pre-approval tells you roughly how much a lender is prepared to lend, so you can shop with a clear ceiling. It is not a final approval, because the lender still assesses the property and your circumstances at the time of your formal home loan application.
Time it for when you are close to buying. If you plan to use Help to Buy, you need conditional approval from a participating lender and Housing Australia before you put down a deposit or bid at auction. Both schemes go through a participating lender, and a broker can liaise with that lender for you. Help to Buy also needs a contract that allows at least 30 days to settlement, unless Housing Australia approves a shorter period.
Once you have a signed contract, the formal application, valuation and building insurance follow. Settlement comes after that. Keep your finances steady in this period, because a new car loan or a drop in income can affect the approval.
The last thing to plan for is the day you get the keys. Both the 5% Deposit Scheme and Victoria's duty concession have move-in rules, so have your moving date in mind before you settle.
Call one of our team or book an appointment at a time that works for you, and we will map out your timeline from budget to settlement.
Frequently Asked Questions
How much deposit do I need as a first home buyer in Traralgon?
Under the Australian Government's 5% Deposit Scheme, eligible first home buyers can buy with a 5% deposit and avoid LMI. The deposit is based on the lender's valuation, so you may be asked to contribute more.
Do first home buyers in Victoria pay stamp duty?
A first home buyer pays no land transfer duty up to a dutiable value of $600,000. A concession applies up to $750,000, and you must live in the home for at least 12 months.
Does the Victorian first home owner grant apply to established homes?
No. The $10,000 grant applies only to new homes that have never been sold or lived in, with a dutiable value up to $750,000.
When should I get pre-approval?
Get pre-approval before you make offers, and ideally when you are ready to buy within a reasonable time. If you plan to use Help to Buy, you need conditional approval before you put down a deposit or bid at auction.
