Preparing to buy your first home?

Let’s start from scratch. A frequently asked question is: “Is there such a thing as a no-deposit home loan for first home buyers?” The simple answer is no, except in the case of a Family Guarantee Loan (see below). Without a guarantor (and often even with one) lenders will need to see a history of saving.

At IMB, you will need at least 5% of your property value saved as a home loan deposit – and you will need to factor in costs like stamp duty, conveyancer fees and any other miscellaneous costs like removalists. In general, rates can be more competitive the larger your deposit is against the purchase value. Check out IMB’s home loan rates and packages. Importantly, any loan with a deposit less than 20% of the property value will require Lender's Mortgage Insurance (LMI) Insures the lending institution for any losses it incurs should the borrower default and the property needs to be sold. LMI is paid for by the borrower if they have a less-than-20% deposit of the purchase price. LMI can cost several tens of thousands of dollars, and increases exponentially the more you borrow..

The Loan-to-Valuation Ratio, or LVR, is the percentage you borrow for a home loan compared to the value of the property. This is the way financial institutions express the value of your deposit. When you apply for the home loan, the lender will independently value the property and calculate how much of the property’s value your deposit will cover. If the property is valued at $500,000 and you have a 10% deposit of $50,000, then your LVR is 90%. Lender's Mortgage Insurance (LMI) is applicable for any LVR over 80%. And there is only one home loan if your LVR is 100%. And that’s…

IMB’s Family Guarantee Loan allows your family to help you purchase a property by offering security for the difference in LVR against their own property, or an investment like a term deposit. This security will ensure that Lender’s Mortgage Insurance is waived. There are still criteria considered, including your capacity to cover fixed expenses like rent, power and so on. Find out more about how IMB’s Family Guarantee Loan works.

There are myriad ways to save money, but these are proven money saving tips to simultaneously budget and save money fast in a big way, accelerating your ability to save your deposit for your first home loan (or a car, holiday, investment property: you name it).

• Have a Savings Goal
• Budgeting
• Consolidate your Debts
• Open a Separate Savings Account 
• Set up an automatic payment plan into your ‘House Deposit’ account
• Move in with the folks
• First Home Super Saver Scheme

Learn more

For now, let’s look at NSW and the ACT, where recent changes have altered the journey to purchase for First Home Buyers.

ACT: Home Buyer Concession Scheme

In the nation’s capital, the First Home Owner Grant ceased on July 1^st, 2019. However, Stamp Duty Also known as Transfer Duty, Stamp Duty is a state government tax which is payable when a property is sold. You’ll have to pay stamp duty within 30 days of purchasing the property. How much it varies from state to state and by the price of the property. is no longer payable on all property types, including vacant blocks of land, provided the buyer meets certain criteria. Again, this could save tens of thousands of dollars off your home purchase. Check out the full details of the ACT’s First Home Buyer Concessions Scheme.

NSW: Two schemes!

In NSW, there are two schemes which first home buyers can access. The First Home Buyers Assistance Scheme (FHBAS), and the First Home Owner Grant. If you are eligible for both – and both can be used together – then you could save up to $34,000 on a purchase of a home worth $650,000.

NSW First Home Buyer Assistance Scheme

The FHBAS offers first home buyers an exemption from Stamp Duty (also known as Transfer Duty) on new and existing homes valued less than $650,000 and at concessional rates for homes between $650,000 and $800,000. Check out the full details and requirements for the NSW First Home Buyer Assistance scheme.

NSW First Home Owner Grant

The FHOG is a $10,000 grant towards the purchase price of new homes (ie – homes that no-one has lived in before) worth less than $750,000 only. It can be accessed in addition to the FHBAS. Read more about the full details and requirements for the NSW First Home Owner Grant.

In addition to your deposit (and Lender's Mortgage Insurance (LMI), you should budget for any upfront costs such as stamp duty, conveyancing fees, establishment fees on your loan, as well as ongoing costs such as property maintenance and loan repayments. You may be able to include some of these costs in your loan, but these costs will add to your loan amount and affect your LVR. As always, having saved the money for these along with your deposit will mean you borrow less and get your home loan out of your life sooner. Your Home Loan Specialist can run you through what loans attract what fees and where you can make savings. Any costs in advertised rates will be expressed as a Comparison Rate A comparison rate helps you work out the true cost of a loan. It reduces to a single percentage figure the advertised interest rate plus fees and charges relating to a loan. alongside the advertised rate. Check out IMB’s home loans.

Also known as 'transfer duty', stamp duty is a state government tax which is payable when a property is sold. As mentioned, some state governments have stamp duty concessions for First Home Buyers – check with your IMB Home Loan Specialist or log on to your state government website for information on the possible concessions available to you. Or use our Stamp Duty Calculator to see how much it might cost you.