Thinking about buying your first home in Sydney?
Housing affordability in Sydney has been the subject of great debate over the past couple of years – Thankfully, there’s been a level of respite for First Time Buyer’s in New South Wales.
As of 1 July 2017, the NSW State Government has introduced new measures surrounding the stamp duty payable for First Time Buyer’s. The comprehensive reforms will include:
- abolish stamp duty on all homes up to $650,000
- give stamp duty relieve for homes up to $800,000
- provide a $10,000 grant for builders of new homes up to $750,000 and purchase of new homes up to $600,000
- abolish insurance duty on lender’s mortgage insurance
- no longer allow investors to defer paying stamp duty on off-the-plan purchases.
To see exactly what stamp duty costs you will be liable for, click through to our Stamp Duty Calculator and be sure to choose the First Home Buyer option.
Now that we know the headline changes, let’s get a true understanding of the impact this will have for someone with a $50,000 deposit against a $600,000 purchase.
$600K Purchase – Prior to the Stamp Duty Concessions = Not Possible
Purchase Price: $600,000
Stamp Duty: $22,767.60
Total Cost: approx. $623,000
Using the $50,000 towards the purchase, your loan amount would be circa $573,000. The Loan to Value Ratio (LVR) at this level would be 95.5% (even excluding Lender’s Mortgage Insurance). Seeing as the LVR exceeds 95%, then this purchase scenario wouldn’t even be possible with only a $50,000 deposit.
$600K Purchase – With the Stamp Duty Concessions = Possible
Purchase Price: $600,000
Stamp Duty: $0
Total Cost: approx. $600,000
Using the $50,000 towards the purchase, your loan amount would be circa $550,000. The Loan to Value Ratio (LVR) at this level would be 91.6%. Seeing as this is higher than the 80% threshold, you would be liable for Lender’s Mortgage Insurance (LMI). LMI at this level is circa $20,000, taking the total borrowing to $570,000 and the LVR to 95%. Whilst this is right on the threshold, its a completely achievable scenario for someone entering the market.
The key takeaway here is that theses changes are putting more people within reach of owning their first home. Even in the very short 6 week period that these changes have been in the market, I’ve had a number of my first home buyer clients be successful in buying a home, and there’s no doubt the extra headroom is giving buyer’s a bigger comfort level in committing to their first home.
If you feel that all of the information around this subject is a littler overwhelming (or your head is sore from reading all of these acronyms -LMI, LVR) please feel free to reach out to me directly on 0451 668 673 and I can answer any questions you might have.