Saving can be challenging at the best of times, but saving for a first home deposit can sometimes feel like an impossible task. While it’s easy to lose track of your finances and overlook your budget when it comes to impulse buys, first home buyers don’t need to despair! To help make the process of saving as painless as possible, we’ve broken down the stats and compiled the information first home buyers need to know when it comes to saving for that deposit…
It Takes Time
Recent research by Domain Group has revealed that the estimated amount of time required to save a 20% deposit for a first home is, on average, only 5 years. Although these results were based on an analysis of entry-level house prices in Melbourne’s most affordable suburbs, similar findings compiled by Bankwest confirm that this 5-year period is broadly consistent across all states. While the saving duration may slightly increase for first home buyers in Sydney, and faintly decrease for first home buyers in Hobart, the 5-year period has emerged as the standard length of time required to save for a 20% deposit.
In good news for dual-income couples, this equates to saving only one-fifth of your post-tax income. On the other end of the spectrum, however, saving for a first home deposit is a little more challenging for migrants and families with young children, with some opting to borrow up to 95% of their property price. Thankfully, you don’t have to face the task of saving alone. There are various financial schemes available to help you achieve your first-home dreams without accruing any additional debt!
Remember, Incentives & Grants
If you’re a first home buyer struggling to save for a deposit, it’s important to keep in mind that you could be eligible for government financial assistance. Depending on your circumstances, the First Home Owner Grant (‘FHOG’) and/or stamp-duty concessions may be available to help you reach your deposit goal sooner.
FIRST HOME OWNER GRANT
Under the FHOG, a one-off $10,000 subsidy is available for qualified first homeowners. While the requirements vary slightly depending on your state of residence, generally, you must be building a new home or purchasing a relevant home no more than 5 years old and with a value less than $750,000. The lender providing your finance will normally lodge the FHOG application on your behalf, so make sure to check in with your bank or credit union!
STAMP DUTY CONCESSIONS
Unlike the FHOG, the first home buyer duty reduction is available whether you build new or buy an established home over 5 years old!
- If your home has a dutiable value of $600,000 or less you may be eligible to receive the first home buyer duty exemption.
- If your home has a dutiable value between $601,000 to $750,000 you may be eligible to receive the first home buyer duty concession.
The dutiable value is generally the contract price. If you elect to buy your home off-the-plan however, the dutiable value is calculated after any off-the-plan concession is applied – this means it will likely be lower than the contract price. Consult with your lender on what options are available to you and make your first-home dreams a reality!
Are you a first home buyer thinking of building your own home? With a little planning and the right advice, the task of acquiring a home loan and building doesn’t have to be stressful! Book a call with our team of experts or call 1800 184 284 to get started today!
If you’re having trouble financing, download our FREE guide to get a comprehensive overview of what you should expect and prepare for!