I’m a first home buyer and want to know what deposit I’d need to buy a unit around $900,000 and could I still access the first home buyers grant as it wouldn’t be a brand new unit, Thanks
I think you fall at the first hurdle mate: the value of the home needs to fall between $650k - $800k
but I think you will get the stamp duty concession which is better than a poke in the eye with a burnt stick, as my dear old Dad used to say.
I am sure that there are loads of people out there who have much better knowledge than I do, but the links I have added are straight from Service NSW which is the go to place for this scheme.
For a 900k purchase there is no stamp or FHO relief. Stamp duty on a 900k purchase NSW is $36,000.
The ideal deposit is 10% plus stamp duty.
Below is an article I wrote a little while ago.
I would always recommend you sit down with a broker such as myself to answer any questions. Our service is always free. From the meeting you will understand your borrowing capacity, funds to complete, process / steps, product, lender and pricing. A broker will also guide you through the whole property buying process.
Article - Ideal Deposit
To purchase property in Australia you will require a deposit or the available equity of another property.
Ideally the bigger the deposit the less you have to borrow which ultimately will reduce your repayments.
LVR - Loan to Value ratio of a property i.e. 810,000 loan / 900,000 property = 90% LVR
LMI - Lender Mortgage Insurance payable to an insurer to protect the lender in the event a lender cannot recover the full cost of a property. Generally payable on loans with less than 20% equity or deposit. LMI is capitalised on the loan and will add to the total LVR.
Stamp Duty - Each state will require you to pay stamp duty on a property. If you are a first home owner you may be exempt or receive a concession.
I have broken the size of your deposit into tiers to assist you with understanding how LMI and Rates are affected. For Residential Owner Occupied it is possible to have 5% deposit + stamp. For an Investment loan at present you will need approximately 12.5% deposit and stamp.
30% + Stamp Duty - No LMI, Best Available Interest Rates
20% + Stamp Duty - No LMI, Good Interest Rates
10% + Stamp duty - LMI Rate Tier 1, Ok / Good interest rates
8% + Stamp duty - LMI Tier 2, Ok / Good interest rates
5% + Stamp duty - LMI Tier 3, Poor interest rates, Not recommend
My tip is if you are trying to find the balance of deposit and property value then a 10% deposit is an ideal target. 8% if you really want to get into a property today. 5% is more of an emergency and need to get a loan as you may forfeit your deposit i.e. soft valuation.
Lenders Deposit Tiers
Some lenders have policy on the minimum deposits size required.
Why having a 10% or bigger deposit is recommended - Soft valuation
A soft valuation occurs when the purchase price is more than the bank values the property.
Original Purchase Price : 900,000
Deposit : 90,000
Loan Required : 810,000
Current LVR 90%
Lender does a valuation and values the property at 870,000
The new LVR is 92%, the client has now been pushed into a higher deposit tier. This means a client will either have to increase their deposit or pay more LMI. If LMI exceeds a lenders policy on minimum deposit required the loan cannot proceed and another lender will need to be found.
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