Can you do it now?
I recently met a couple in their early 30’s who were surprised to hear how easy it was to purchase their first home. Having recently moved from Melbourne to Perth, they were completely priced out of Melbourne’s ‘expensive’ market and were surprised a $50,000 deposit could secure them a two bedroom apartment in the desirable beachside suburb of North Beach. Thankfully an accountant friend of mine showed them it was in fact possible and suggested they have a chat to me about their finance.
Working out the figures
The couple both earn average incomes of $70,000 p.a.. Their deposit of $50k was sufficient to purchase the apartment for $500,000. The mortgage repayments were less than what they were paying in rent in Melbourne.
Not all client’s financial situations are the same but let’s paint a paint a picture for someone who is yet to save a deposit and doesn’t have a partner to share the mortgage with.
Let’s assume you earn $65,000 per year and have nil dependents. You have a credit card limit of $10k which is paid off monthly and no other financial commitments. Based on this, you can buy a property around the $350,000 range.
The Benefits of Being a First Home Buyer
As a first home buyer you are entitled to two benefits – a reduction or exemption of the stamp duty depending on the value of the property, plus a $15,000 grant if you buy a brand new property that hasn’t been lived in.
In the example that I have used and by purchasing a brand new property you would be exempt from paying any stamp duty – which constitutes a saving of $11,000! With the stamp duty covered, you will only need to contribute the 5% deposit which equates to $17,500 for a $350,000 house.
Saving for the Deposit
To achieve your lifelong goal of owning your property asset you can will need to save the deposit which will mean you will need to be stringent with your budget.
Property cycles go every 10-15 years and in this time your property can double in value. You can pay off your mortgage over this cycle and as your situation improves, a partner adding to the mortgage and a pay rise at work.
