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First Home Buyers FAQ

How much money can I borrow?

This is a great place to start. The amount you can borrow will be based on your unique set of financial circumstances. Your income, assets, liabilities and credit history can all affect your borrowing power. Each lender will have a different set of criteria. Our home loan calculator can help give you an idea of how much you can borrow.

Which loan is right for me?

Shore Financial brokers can help you find which of the hundreds of home loans will best suit your needs. The structure of your home loan has a massive impact on the amount of wealth you create through property.

At Shore Financial, it’s our passion to be strategic and get you into the perfect home loan for your unique circumstances.

How much money do I need for a deposit?

The deposit you’ll require depends on the type of home loan, the strategy and the lender you select.

But typically, as first home buyer, you’ll need 5 – 10% of the purchase price as a deposit.

What is the first home owner grant (FHOG) and am I eligible for it?

The FHOG scheme is a national scheme funded by the Federal Government, but administered through each state or territory Revenue Office. The amount available ranges from $7,000 up to $26,000 and differs from state to state.

Find more information on each state’s eligibility here.

To be eligible for the first home owner grant you and your spouse should not have previously owned a home or claimed the grant. Read more here.

Can I get the first home owner grant if I'm buying a joint property?

If you’re buying a property with someone else you can still get the first home owner grant, providing all the co-purchasers are eligible to receive it.

How much stamp duty will I need to pay?

Stamp duty  is a tax levied by all Australian states and territories on property purchases. The  stamp duty  a buyer pays is based on the property purchase price, location and loan purpose. Some states charge different rates on investment properties to those charged on places of residence.

Use our stamp duty calculator to get an idea of what you will need to pay.

How is interest calculated?

This is determined by your lender and loan contract.

Typically, the interest cost of your loan is calculated daily on the outstanding balance.

For example: daily interest on a $300,000 loan with a standard variable rate of 7% p.a. Is:

($300,000 x 7%) ÷ 365 = $57.53

Most loan types require the actual loan amount (principal) to also be paid back.

This amount will be added on top of the interest payment. To find out what your repayments will be, use the Shore Financial mortgage repayment calculator.

What's the difference between 'principal and interest' and 'interest only' repayments?

Principal and interest  simply means that you pay a portion of the loan balance in addition to the interest charged over the agreed period.

You essentially pay back the loan over the term of the mortgage. Your repayments also include part of the loan and part of the interest on the loan.

Interest only  is when you’re paying the interest on the balance with no principal over an agreed period.

What is redraw?

Some mortgages allow you to make additional payments on your mortgage, over and above the amount that you are required to pay and have already paid into your mortgage. This means that there may be additional money that you can redraw from your mortgage.

Each lender is different, and many loan products differ, but your lender may allow you to withdraw the extra funds.

What is an offset account?

An offset account is a transaction account linked to your mortgage, where cash parked in this account ‘offsets’ (reduces) the amount of interest payable on your mortgage.

This is a popular strategy and can help you pay off your home loan more quickly.

What is the difference between offset and redraw?

When you make additional payments above the minimum amount into your mortgage to reduce the interest calculated, it goes into ‘redraw’. Depending on the lender, these extra payments can be accessed, or drawn on at any time, but if you do access those extra funds, it will affect the balance of your mortgage and interest payable.

Your offset is when you hold these additional payments in a separate transaction account – you aren’t reducing the balance of the loan but you’re still getting interest reductions, enabling you to pay off your home loan sooner.

What is a line of credit loan?

A line of credit is a flexible loan allowing you to draw down and repay smaller or larger sums at any time up to an approved limit. These loans have an agreed term and repayments are interest only, based on the amount you have drawn down at the time.

What is Lenders Mortgage Insurance?

Lenders Mortgage Insurance is insurance you’ll pay to the lender if you borrow more that 80% of the value of your property.

It’s the insurance the lender takes out for the mortgage to protect itself, but it also allows the borrower to get into the market with a smaller deposit.

The bigger the deposit you have, the less your lenders mortgage insurance will be.

Depending on the loan type and amount, some lenders will allow you to add the cost of this insurance onto the loan so that you don’t have to find the money upfront to pay for it.

Do I need a solicitor or a conveyancer?

Every buyer should have a solicitor or conveyancer. Once you’ve found a property, the agent should send the contract of sale to your solicitor or conveyancer for review.

They will also help with the settlement process and exchange of title documents.

How long does settlement usually take?

Settlement time varies with every sale individually, however four to eight weeks is normal.

The settlement period is negotiated between buyer/seller and can be affected by the lender’s and buyer’s ability to complete requirements prior to settlement.

What does a strata report provide?

A strata report applies when buying a unit, town house or when there’s common property managed by a strata scheme.

It usually gives you the following information:

  • Whether or not the strata scheme is adequately insured
  • Any regular or special levies
  • What renovations and maintenance have been completed
  • Any evidence of potentially expensive building or structural problems that need fixing
  • Whether or not the strata scheme has an adequate reserve of funds
  • Evidence of how well owners work together to maintain the property
  • Any strata regulations relating to renovations, refurbishment or pet ownership

What is a contract of sale?

Every property sale requires a contract of sale, which is a legal document between the seller (vendor) and buyer (purchaser) and includes the agreed sum.

The contract of sale often includes: a sewage diagram, a copy of the certificate of title for the property, a zoning certificate from local council and copies of documents relating to any other registered interests over the property.


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