You Need to Ask Yourself These Questions Before Buying Your First Home

15 November 2019
Females Standing In Lounge Of New Home On Moving Day

Buying your first home is a big decision. Here are the answers to the key questions that first homeowners need to ask.

1. Who provides the $10,000 First Home Owners Grant (FHOG)

The First Home Owners Grant in Western Australia (FHOG WA) is provided by the Department of Finance. It’s available to help eligible first homeowners to buy or build a new home as their principal place of residence.


2. Does the FHOG in WA come straight off the purchase price?

The First Home Owners Grant can be used as a contribution towards the deposit or as a reimbursement to an eligible individual after approval post-settlement. The price of the home itself does not change but rather the grant’s purpose is to help first home buyers with the finance component of purchasing their home.


3. What is stamp duty and when does it need to be paid?

Stamp duty is a State government charge that you must pay on your settlement date when you’re buying a property. However, if you’re eligible for FHOG in WA, you’ll also be eligible for either an exemption or a lower rate of stamp duty, provided that the value of your new home is less than $530,000.

You’ll pay no stamp duty if you buy a new home for less than $430,000. If you buy a home that’s valued between $430,000 and $530,000, you’ll pay no stamp duty on the first $430,000, and $19.19 for every $100 over that amount.


4. What does a settlement agent do?

A settlement agent arranges the transfer of ownership of a property between a buyer and a seller. This includes, but is not limited to:

  • Ensure all inspections are completed prior to settlement
  • Prepare and verify all required legal documents
  • Attend settlement on your behalf for correct exchange of documents and funds
  • Prepare legal paperwork to transfer the property title to you
  • Liaise with financial institutions, councils, strata and other authorities to make sure your settlement goes smoothly and you only pay for dates you owned the property
  • Provide a settlement statement

As part of the BGC Housing Group, Now Living Realty has good connections with Simply Settlements who will ensure a smooth settlement process.


5. How much will a mortgage broker cost and why would I use one?

Mortgage brokers are a must-have when it comes to buying your first home! They find you the best home loan for your needs and this includes many variables such as interest rates, fees, offset accounts, redraw accounts etc.

The cost of mortgage brokers vary. Many will not charge you a fee at all, instead, they will be paid a fee or commission by your lender.

Now Living Realty works alongside The Loan Company to get you the best deal on your home loan.


6. How much deposit do I need?

This is dependant on which lender you choose to go through. Keystart offers a 2% deposit home loan which is a great initiative for first-time homeowners. Additionally if eligible, you can use your $10,000 First Home Owners Grant towards your deposit amount. Other lenders will typically require a 20% deposit if you do not want to pay Lenders Mortgage Insurance (LMI), however, if you are happy to pay this and capitalise into your loan certain lenders will accept deposits as low as 5%.


7. Can I avoid paying lenders’ mortgage insurance (LMI)?

LMI protects lenders against the risk of borrowers not making their home loan repayments. Most lenders will require you to take out LMI if your home loan deposit is less than 20% of the value of your new home. The cost of LMI can be several thousand dollars.
However, you won’t be required to take out LMI if you get a Keystart loan, though you may pay a slightly higher interest rate.


8. What happens after my offer is accepted?

Congratulations, your home is now under offer! Secure the home by paying your deposit and nominating your settlement agent. Once your finance approval is received you can carry out all inspections and settlement is booked in. Once the settlement is completed, the keys are yours!


How we can help

At Now Living Realty, every year we help over 260 people into their own home and we’d love to help you too. Our good connections at Simply Settlements and The Loan Company* means that we are able to help you along your entire purchase journey.


Disclaimer: The above is provided for informational purposes only and is not intended as financial or legal advice. Eligibility criteria applies to all products.
Finance provided by Harrisdale Pty Ltd trading as The Loan Company ABN 59 088 462 140 Australian Credit Licence Number 386355.