Budgeting for a new home in 2014 can save thousands of dollars
Media release - 17th January, 2014
First home buyers can still crack the market, says Raine & Horne
After being beaten to the punch in 2013, first time buyers are expected to return to the Sydney and Melbourne real estate markets in greater numbers this year, as more investors shift their attention to Queensland to expand their property portfolios.
That’s the good news, however there are still plenty of hoops for first time buyers to negotiate, including the saving of a deposit, to make a new home a reality in 2014, according to Angus Raine, Executive Chairman and CEO of Raine & Horne.
“A larger deposit will also potentially assist first time buyers to avoid, or minimise, the expense of Lenders’ Mortgage Insurance (LMI),” says Mr Raine.
LMI is usually only charged if a borrower is unable to muster a deposit equivalent to about 20 percent of the property’s purchase price – and it’s an insurance that protects the lender, not the borrower, if a loan is defaulted.
“The amount of LMI payable is calculated on the purchase price of the property and the loan amount, and can potentially cost buyers many thousands of dollars over and above the expense of buying the home,” says Mr Raine.
A great way to start building a larger deposit is with a budget, advises Mr Raine, which is a plan that shows how much money is being spent and saved, typically on a weekly, fortnightly or monthly basis.
“By analysing your income and expenses, you can quickly see what’s left over to put towards building a more significant deposit,” says Mr Raine.
“Budgeting also has the benefit of allowing you to identify areas where you can make changes to your spending habits that will help you build a bigger deposit.
“Perhaps you may not need that new iPad or pair of shoes right away, and if you can instead show lenders you have a saving discipline, they’ll be much happier when it comes to lending you money for a home.”
If financial management and budgeting is a new concept, there are some simple tools to help first home buyers, according to Mr Raine.
“The Australian government, via its Money Smart website, has a very useful budget planner which takes away most of the work involved in preparing a budget – although home buyers will still need to do some work collating evidence of their assets, income, liabilities, debts and expenses as accurately as possible,” says Mr Raine.
According to Mr Raine, first home buyers can also boost deposits by taking advantage of government inducements, and he suggests they visit firsthome.gov.au to start the search for incentives offered by all states and territories.
In NSW, for example, the First Home Owner Grant (New Homes) scheme delivers a $15,000 grant to eligible first home owners planning on building or purchasing a new home.
“Additionally, the First Home–New Home scheme provides eligible purchasers with exemptions from stamp duty on new homes valued up to $550,000 – the exemptions are gradually reduced up to $650,000, where they are curtailed,” says Mr Raine.
For further media information contact:
Angus Raine, Executive Chairman & CEO, Raine & Horne on 0498 071 991
Andrew Harrington, National Marketing & Communications Coordinator on 02 9258 5400