Getting into the realestate market feels near IMPOSSIBLE these days. Housing prices are constantly rising and forget trying to save when you’re renting. Phil and I are dreaming of getting into our own home but even with our combined income, we’ve found that renting is seriously slowing us down (sigh). I know heaps of other first home buyers are in the same position, so what are your options?
First Home Owners Grant
This may grant you up to $15,000, woohoo! But before you get too excited, here’s what you’ll need to be eligible in SA:
- Yourself or other applicant (if applicable) must be an Australian Citizen or Permanent Resident.
- None of the applicants are allowed to have owned their own property before.
- All applicants must actually live in the house (so no cheating by using third party)
- Must be over the age of 18
- The property market value must be less than $575,000
- Only applicable on new homes (e.g newly built & not lived in) OR building yourself.
That last one is the real kicker. Especially when you realise that $15,000 towards a deposit for a NEW home is only scratching the surface. For a more detailed description of the FHOG head to – https://www.revenuesa.sa.gov.au/grants-and-concessions/first-home-owners
Home Start Finance
Home Start Finance is basically a loan company (not a bank) that allows you to purchase a home with a low deposit (as little at 3%). Usually to purchase a home you would need to save a 10% deposit + extra for fees and stamp duty…so a lot of $$$.
Basically the catch is:
- You need to show proof of SOME savings but according to their website, that can even be proof of paying rent (score). They need this to prove that you would be able to make your repayments to them.
- Your deposit may be lower but your repayments & fees will be higher than if you were to borrow through one of the bigger banks.
- You still need to save enough to cover stamp duty.
- If you are building, then the minimum deposit goes up to 6%.
But what’s great is:
- The FHOG can potentially cover the full 3% deposit, so all you need to save for is stamp duty
- You can refinance! This is key because you will be making higher repayments with Home Start, so the sooner you can afford to switch to a bigger bank, the better.
- It can get your foot in the door.
If you are considering Home Start, I would definitely recommend giving them a call for an initial quote. A lot of the time, the website will give you the best possible outcome but may not be applicable to your situation, so it’s always best to speak to someone directly – http://www.homestart.com.au
Homes By Metricon: 2k on your way
Home By Metricon claim that you can own one of their homes with as little as a 2k deposit. Sounds too good to be true right? After looking at some reviews online, I think it just might be.
Some of the issues reported:
- Low deposit but your repayments are super high
- Some new home owners found their houses had a lot of defects after being built
- Quality of the finishes are subpar
- The ‘2k’ is just considering the deposit, you still need to save some money for stamp duty
People who loved it said:
- It helped them get into the realestate market after years of trying.
- You can actually build in a wide variety of great suburbs (this one surprised me)!
- The build process is quick and relativity seamless
- They prefer the higher re payments as it’s going towards their own home as opposed to rent which is essentially ‘dead money’
After speaking with one of the consultants at Metricon, I got the impression that they want to try and get you into a home no matter your situation. While this seems great, I don’t think they necessarily have your best financial interests at heart. Always speak to a consultant first (they offer their first consultation free) and don’t go any further until you have all the information. They will probably try and book you in for a meeting on the spot so don’t agree unless you are ready for the process to go ahead (or before you know it, you might be building before you’re ready)!
New Estates or Communities
This trend is becoming more popular, especially when it comes to new families who just want to get out of renting. New ‘Estates’ or ‘Communities’ are being built and offering more affordable home options for applicants who get in early.
The good things are:
- Homes are all new, so FHOG is applicable
- An option for people to don’t want to renovate and want to afford a new, modern home
- Early bird discounts and more affordable housing in general (as opposed to established suburbs)
- House and land options available
The only real downside:
- Location & re-sale value. It’s much more desirable to build or buy in an established suburb. When it comes to selling your home one day, location is everything
It’s not to say that the Estate you build in might not take off and become a popular place to live, but there is a lot less risk involved when you are located somewhere where the market is already great.
I am still doing my research and in the mean time, we are just trying to save as much as possible! One option that works for one person may not work for you, it really depends on the different variables. The housing market has changed a lot over the years and it’s a little different for us than it was when our parents were buying their first home (in the Eastern suburbs for only 70k ugh).