Tasmania is one of those places that needs no introduction. It is so popular that tourists flock to this peninsula every year and still go back for more. Many have made this place their home or even bought themselves a holiday home. According to the statistics, over 110,000 Australians bought their first home here. Click here for more information.
This quick guide below tells how you can become a first home buyer in Tasmania, so you can follow suit and avoid any costly mistakes from day one.
Steps to Buying Your First Home in Tasmania
Before taking any first step in such a large endeavor, it is advisable to take heed of your financial situation. Knowing how much you can afford to spend is key to getting anything, in any country. The quickest way to do this is to total up all your (or your partners) expenses and then subtract this number from your income, to find the amount left over, which will go towards the mortgage or any loans you may need to get for the purchase of the property.
How Much Can You Borrow? This is also important to consider, as not many people can pay the full amount of the property price in cash or bank deposit, and knowing how much you can borrow will help towards the cause. Typically, what banks or loan companies look at are a few things, and you as the buyer, can implement some action to make sure you become eligible to borrow money. These things include:
- Cutting down your living expenses as much as you can for at least three months before applying for the loan.
- Cancel or reduce the amount you spend on your credit cards.
- If you are signed up for any “buy now pay later” contracts or services, be sure to cancel them immediately. Even if they are short-term they are considered a liability.
- When applying for a home loan, make sure you go for the longer-term ones. In other words, the amount you borrow tends to increase with a 30-year loan for instance, compared to a 20-year mortgage.
Don’t Forget About Upfront Costs
Don’t forget, the amount you are buying the house for is not going to be the final one. There will be extra costs such as upfront costs for hiring a solicitor, mortgage broker, and estate agent if you need one. These fees and service charges can cost up to 5% of the value of the property, especially where there is a charge on stamp duty, which you can calculate here: https://stampduty.calculatorsaustralia.com.au/, in some regions if you are a first-time buyer you may be exempt.
A Deposit Is Needed
Another important thing you cannot do without is the deposit. Typically buying any home will follow the 80/20 rule, which means 20% of the deposit and 80% of the costs of the house, in some places you need a 20% deposit, while in others you could get away with 10%, but rather have more than less.
If for instance, you are buying a house in Tasmania worth $600,000 the deposit amount which is 20% will be $120,000, and if you are renting at the moment, this will be a significant amount to try and save up unless you have multiple income sources or other helpful investments such as stocks and shares.
Tap Into A Scheme or Two
The good news is there are a few government grants or schemes that one can tap into when buying their first property. In Australia, there are a few and we list them below:
FHLDS or First Home Loan Deposit Scheme: This is a scheme that allows a first home owner to be able to buy a simple home with a deposit of anywhere between 5% and 20%, thus avoiding the high costs of the Lenders Mortgage Insurance fees, which is typically required when buying a home and which is waivered when under the scheme.
FHOG or The First Home Owners Grant: This is a once-off government grant offered to first time home buyers and more can be found on their website.
Stamp Duty Exemption: Something to consider when buying your first home is the stamp duty concession which can be discounted when you apply for it. The price threshold, however, will depend on the area you are looking to buy your new home.
Applying for Pre-Approval
Many first-time buyers often apply for pre-approved loans only to be turned down due to some reason or the other. However, this should not stop you. If you have followed all of the steps in the ‘How Much Can You Borrow?’ section, then you shouldn’t have any issues.
Applying for this simply means that you will have the lenders check your finances and paperwork for you if you cannot come up with the full amount and will be needing that loan. You can either apply for conditional approval or a pre-approval.
And there you have it, these are the steps to making sure you have the idea to buy your first home.