Victorian First Home Buyers win – but what does it really mean?
The property market was served a first home buyer trifecta this weekend, and the state is ‘abuzz’ with questions and calculations.
Firstly, we need to understand why we have first home buyer incentives. They are put in place to bring forward activity, whether that be to enable home ownership, provide employment opportunity through building activity or to combat price obstacles. They don’t guarantee first home buyers can afford a property, good savings history, employment and stability are still mandatory for finance approval. You still need to be able to afford a repayment scheme, but your deposit options a much more palatable.
The State Government has just released their Homes for Victorians – Affordable Housing Strategy with three key benefits for first home buyers starting July 1,
- Abolished stamp duty for first home buyers – purchase price up to $600,000 then phased up to $750,000
- Double the grant for regional areas – grant increased to $20,000
- HomesVic, shared equity schemes – share up to 25% of home purchase to reduce deposit requirements for lower income earners
A buyer purchasing their first home in a metro area can effectively save around $15,535 on a $600,000 purchase by removing the stamp duty component, which can translate to $30,833 over the life of a standard 30 year home loan (based on standard variable rate of 5.25%). In regional areas, the savings are huge, circa $35,535 on the purchase price for a similar property.
The news is great for regional first home buyers, with the government’s push to de-centralise from cluttered Melbourne and switch the focus to new opportunities. Some lenders will consider the grant as part of your savings and hence deposit, but this is an area you are best to get advice on.
Importantly, these incentives shouldn’t mean you can now spend more on your home, don’t be tempted to increase your budget, but you should be able to manage the lifestyle-debt balance a little easier.
While the new incentives don’t commence until July 1, now is the perfect time to get your finances in order, check your pre-approval status, and start looking for that perfect first home. If you are thinking about building a new home, start your land research straight away, talk to the developers and understand what the implications are if you choose to deposit before July 1.
Premier Andrews expects the doubled grant to bring 6,000 new home buyers into the market, while the stamp duty abolishment will attract a further 25,000 buyers – now is the time to get organised and don’t get caught up in the July 1 rush. Speak to your Loan Studio consultant today and start planning your new home.