Step 1) Select your Property Budget
• It’s important to know what’s your budget for your first home as we would be aiming to have max 85% loan value of the property and looking to save extra for other changes like stamp duties, additional surcharge and FIRB fees. In South Australia, Additional surcharge is 7% of the land price and stamp duty is currently 4% of the land value.
• FIRB approval cost $6350 for land value under $1m and we encourage you to get land and house package to pay additional surcharge and FIRB approval on land value only.
• Keeping average house prices around $500k in mind for emerging suburbs, you need to have approx. $75k in saving to make it a smooth transaction.
Step 2) Find right Property that suits you
• It’s going to be your first home in Australia so you need to make sure you understand your only basic requirements first.
• Always try to build or purchase small or entry level dwelling if you are first home buyer as once you start living in that property, you will get to know more about your real requirements of space to make sure you want to keep it that size or want to upgrade or downgrade.
• It’s also important to make sure that you do not choose too fancy or lots of upgrades in building as in most cases, you only know you requirements after 1-2 years of moving in property.
• Make sure you have put in the condition of getting FIRB approval in your purchase contract and you get at least 3 months to settle due to long process involved.
Step 3) Get Foreign Investment Review Board Approval
• Once you have short listed your suburb, requirements and property, you need to apply for FIRB approval which can take up to 8 weeks.
• FIRB approves you to be a temporary resident to live in that property as principal place of residency. You can buy existing dwelling or build a new dwelling for living but you cannot buy existing dwelling for investment purposes if you are temporary visa holder.
• FIRB charges $6350 for residential property value of up to $1m and further from there depends on total value to determine the fees.
Step 4) Apply for Mortgage
• Once you get FIRB approval its time to apply for your loan application. Normally before you get final approval from FIRB, you should have your documents and information ready. Highly recommended that you start working for loan application along with FIRB application so you would be ready with full application and supporting documents.
• Try to have your loan amount to only either 80% or case to case 85% of total land value to avoid Landers mortgage insurance and have smooth loan process. Being temporary visa holder, you want to minimize the risk in your application.
• Choose the lenders which are flexible with visa holders to meet their servicing requirements as some traditional landers due to low liquidity, they have strict processing guidelines. You do not want to refusal in your application as it will impact your next application for credit.
Step 5) Settle the Property
• Once you have your finance approved, settle the property or land with rest of the funds required so you can start building your dream house on it.
• Try to have your Land and House agreement loan applied combined, if possible, to reduce the processing delays.
• Choose smart conveyancer to make sure they have done due diligence on property you are buying to avoid future troubles.
• Start building your house and make sure your building contract has fixed time frame mentioned to have your home ready in time. Most builders offer fixed time turn around so benefit from that to make sure you avoid paying future rents for any delays.
Step 6) Move in and Enjoy growth
• Finally, you are at your last stage of owning your first home in Australia so it’s time to celebrate and enjoy the brand-new home.
• You will be also enjoying your property growth on total value whereas you have only paid extra cost on land value so with property growth of over 3% each year, you can easily pay this additional cost in property growth over time of your current visa.
• On average, you will be having growth of over $50k in 3-4 years’ time compared to your original extra investment of extra surcharge and FIRB fees. Its all worth it as this gets you in property market earlier compared to others who would be paying extra in future.
• Pls note that this is not a financial advise but you should consult registered financial advisor as per your profile to make sure this suits your budget.
In current growth of property market, it won’t be slowing down any time soon specially with the fact that current boom is all because of returning
Australians from overseas around Covid19 but we also must consider the future incoming international students, temporary migrants to Australia around employer sponsored visas. They will be pushing market higher in rental and entry level segments so it’s never too late to enter in property
market or you won’t be paying extra.
Get in touch to start your Australian journey of owning a home. Register your details and we will contact you to discuss more.