January 2009
In corporate offices as with many residential apartments you get to find out a great deal about you neighbors. This is helped in no small part by thin partitioning walls. I could tell by the shouting, my next door neighbor was negotiating the purchase of his first home. I say negotiating but really it was five minutes of energetic and highly emotive debate followed by some name calling. The loud thud of the phone hitting the opposite side of my wall signaled the end of a rather animated chat.
Later I saw my neighbor in the hall and in way of explanation for the outburst he indicated that he had become way too emotionally involved and that things had finished badly. I know why he had been so charged. Buying your first home is emotional, also this is historically the best time of the year to buy property. Interest rates are at an all time low and the first home owners grant has increased to a level that many people are able to buy their first home with only having to tip in a small amount of their own cash or in some cases none at all.
In Victoria first home buyers will be eligible for a higher overall grant if they purchase from the 14th October 2008 to the 30th of June 2009. For properties under $500,000 the entire cash contribution from the government will be $17,000 for an established home and $26,000 if you build your own property. There are additional bonuses if you buy and or build in regional Victoria.
As an example; if you bought for $250,000, the grant would cover your deposit and the majority of your purchase costs. Let’s assume you were putting down a 5% deposit and paying all the associated costs. Your deposit would be $12,500, the stamp duty would be $8,870, the transfer fee $731 and say $2,000 for other miscellaneous fees and charges (like conveyancing, bank fees, etc). This would mean you’d only need $24,101 less the grant ($17,000) which is $7,101. The rest of the funds naturally you’d borrow as a home loan including any lenders mortgage insurance.
This is of course only a guide. Your figures will vary according to you individual circumstances so feel free to email me and I can run scenarios for you. I can also give you an indication of your borrowing power. The grant does have eligibility requirements and conditions. Basically, the property must be the first property that you have bought and occupied and you need to live in it for at least six months starting within the first twelve months of ownership. To check out all the eligibility requirements go to the State Revenue Office of Victoria website.ww.sro.vic.gov.au
My neighbor was clearly still embarrassed. I told him the first property is always the hardest. Foolishly I mentioned that I was about to start my own negotiations on an investment property and I was a little nervous. He offered to help me with the negotiations. I refused.
Evan Davis
