Smart First Home Buyer Decisions
Smart First Home Buyer Decisions
Smart First Home Buyer decisions are dependent on the work you put in before you buy. Don’t just rush out as soon as you have saved a deposit and buy. It is always better to do a lot of thought and research when entering the housing market. 
–Where do you want to buy and why?
–What is your budget?
–Do you have your loan approval in place and for how long?
–Is there reliable public transport nearby?
–If interest rates went up in future or you had a period not working, could you still afford the mortgage?
–How are you going to pay your deposit?
–What settlement period works best for you and can you be flexible?
–If you are leasing, has your lease expired or will you need to break your lease?
–What additional costs will be involved, legal, building inspection, pest inspection, a reliable Buyers Agent?
At Buyer Solutions, we work for First Home Buyers all the time. It is very common that they wish to remain under the $600,000 purchase price to avail themselves of the stamp duty reduction offered if they do. We encourage them to think longer term and question whether this is always the right approach.
Stamp duty is a one off tax when you buy the property and in the state of Victoria is around 5.5% of the purchase price of the property. So, its not a small amount.
However if you buy a “short term” property to save some stamp duty now and need to sell and then re-buy your long term property, then costs add up. Most First Home Buyers don’t realise that if they spent a little more and paid the full stamp duty now, they may buy their “forever home” and in the long term save even more.
So, if you are buying your first home and your budget could be more than $600,000 do spend the time to shop above that limit as well. Familiarise yourself with what $650,000 would buy or whatever your budget is and decide whether spending a little more and finding your “forever home” would make more sense then buying what you can secure under $600,000.
So if you pay $600,000 for aproperty and save around $15,000 in stamp duty and then you need to sell in 2 years what is the net financial benefit? Expect to pay around 3% in total for selling commission and advertising or $19,800 assuming you sell for $660,000. Then you rebuy for $750,000 and pay stamp duty for the second home of $40,070. So you have saved $15,000 only to spend a total of $59870. Instead of saving $15,000, its actually cost you an additional $45,000 and the stress of two moves.
For up to date information on what’s happening in real estate in Melbourne, contact Janet at jspencer@buyersolutions.com.au or 0418 101 146.
Buying property, First home buyers, Home buying, Housing Affordability, Housing Market, Janet Spencer, Overseas Buyers
+61 39816 8555
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