First Home Buyers Guide for the Australian Capital Territory
A complete step by step guide to buying a first home in the ACT
When you first buy a new home, you're able to benefit from particular concessions which won't be available to you further up the ladder. The Australian Capital Territory (ACT) is no different to the other states, but even so, it can still be difficult to know where to start when buying for the first time.
Let's take a look at everything you need to know when it comes to a first home purchase in the ACT, from ways to buy, right through to finalising a sale.
Ways to buy your first house in the ACT
Perhaps the most common way to buy a property in the ACT is via a private treaty sale. The vendor will set an appropriate price that they'd be willing to sell for, and the real estate agent will then negotiate with interested buyers, attempting to land a sale as close to the figure as possible.
When buying a property in the ACT through tender, a single offer will be made, normally with a deposit of up to 10 per cent of the asking price. The vendor will then either reject or accept the offer.
When you buy a house at auction, you'll have to meet a reserve price, which is essentially what the home must sell for as a minimum. Should bids go higher than the reserve, the biggest bid will win. The highest bidder must sign the contract after the auction, which is overseen by a licensed auctioneer.
For more information, take a look at the ACT government website.
Look forwards with your finance
It's important to find out how much you're able to borrow from a specific lender, and you can start by figuring out how much of a deposit you can save - typically, this is around 20 per cent of the total price. In some cases it can be lower, but this may result in tough conditions being placed on your mortgage, so aim to save as much as you can.
Head over to the MoneySmart website to find out a little more about how to effectively budget for your first ACT property.
Securing a home loan
If you can't quite manage to pull together a 20 per cent deposit, it's possible that you will incur lenders' mortgage insurance, which can be massively expensive. Speak to the team at LJ Hooker Home Loans, who will help you come up with a plan and guide you through a range of suitable mortgage products.
The ACT First Home Owner Grant
Just as with the other states in Australia, the ACT has special financial offers for those looking to buy their first home, which is known as the First Home Owner Grant (FHOG). The FHOG for ACT allows you AU$10,000 towards your first home, as long as the value of that home is less than $750,000.
For more information on the ins and outs of this grant, such as eligibility criteria, be sure to check out the official page - we're sure you'll find it most useful.
Are there any hidden costs when buying your first home in the ACT?
It's simply the nature of the business that when purchasing your first home, you'll have to face the reality of unavoidable fees during the process. Below, we'll take a look at a few of them.
- Perhaps the most obvious of the fees that you'll come across is stamp duty. This is a tax imposed by the ACT government, and is based on the value of the house you're buying. Stamp duty is renowned for how variable it can be, so be sure to use the government's calculator to find out how much you'll have to pay.
- Land tax in the ACT is based on a fixed charge of $1,090 for all properties and is assessed quarterly - July, October, January and April. You can figure out much precisely you'll owe by using the calculator.
- Depending on the complexity of your contracts, your legal fees could be as low as $500, or anything up to $3,000.
- When applying for a loan, a lender's fee of up to $1,000 can be charged, but in some cases, there is no fee. Often, it's waived by the lender.
- When having your home independently valued, you'll be charged around $300-500 for the service.
- If borrowing more than 80 per cent of the property's price, you could be charged lenders mortgage insurance. This is a one-off payment that gives the lender a measure of protection if you fall behind on your loan repayments, and averages around $10,000.
- For a house inspection (typically for structural integrity or pests) you'll have to pay approximately $300 to $400. A strata report will cost you up to $200.
A solicitor, conveyancer or the expert team at LJ Hooker can help you understand these fees in greater detail.
Choosing your first house in the ACT
Property reports and research
Doing your homework on the property market will enable you to understand, in greater detail, just what is available out there, how much it costs, and what your options are as a first time buyer.
- Your local LJ Hooker branch can provide you with a report specific to your needs.
- It's worth seeking out the CoreLogic RP Data and Australian Property Monitor websites, as these will give you a greater understanding of certain trends and price shifts.
- Websites such as domain.com.au and realestate.com.au, as well as ljhooker.com.au can quickly and easily show you what's on the market, the price, and sales volumes.
By carrying out research, you'll be able to get an idea of where you'd like to live. Will you look for a small flat close to amenities, or go for a bigger place on the outskirts of town?
Where to look for a first home in the ACT
Property reports and research
Doing your homework on the property market will give you a better understanding of where you can buy, as well as how much it will cost.
- Your Local LJ Hooker office can provide you with a local market report.
- Australian Property Monitors and CoreLogic RP Data are both superb providers of property data and relevant information.
- Websites such as domain.com.au, realestate.com.au and our very own ljhooker.com.au will give you an idea of what is on the market.
At LJ Hooker, we have amassed a great wealth of market knowledge and experience, allowing us to provide a list of suitable homes for the first time buyer. By using our help, you'll save time and no small amount of stress that house-hunting can bring.
The property sections of local newspapers are also well worth seeking out, as these feature a broad list of available houses in the area. Additionally, using the advice of a professional could help you find a great place in an area you had not thought to look.
How important are inspections?
An inspection is vital, as it allows you to get a greater knowledge of the property that you're looking to buy. A thorough inspection will stand you in a better position when it comes to negotiating for your new home - including what the final price will be. If you choose to go ahead without an inspection, you're at risk of purchasing a place that needs a lot of renovation work to bring it up to standard, at further expense.
Be sure that your inspector is fully registered - find out more by visiting the ACT government's web page on the matter.
Contracts of sale
The contract of sale is of huge importance when it comes to purchasing your first home in the ACT. This is because it includes such details as:
- The contact details and addresses of the seller, buyer and any solicitors involved,
- How and when the deposit will be paid, as well as where it will be held,
- The time and date of the final settlement, when the title will be transferred,
- The cooling-off period - in the ACT, this is five business days,
- Any other conditions of the sale, such as penalties for terminating the contract.
We recommend that you hire a solicitor or lawyer to help you go through the documentation, to ease you through the more technical parts and prevent any snags later down the line.
Finalising the sale
If you've found your perfect first home and are ready to make an offer, enlist the help of an experienced LJ Hooker buyer's agent. We'll help to negotiate the price of a home, as well as other conditions such as inspections and moving in dates.
Both parties will then sign and exchange the contracts of sale. The deposit will be paid, and the settlement process will begin. As soon as you have received the contract, a cooling-off period of five business days begins. This time is used to ensure that every last detail and clause is ironed out.
Should you buy your first ACT home via auction, no such cooling-off period occurs. Other conditions, such as inspections, won't be placed on the sale either. Should you win the auction and take ownership of the home, payment of the deposit occurs on the day of the auction itself, so having your finance approved and deposit at the ready is essential.
Before the auction, be sure to go over the documents which will detail the current state of the building. As bidding at auction can become stressful, it can be helpful to have an LJ Hooker buyer's agent do it all for you.
Contract exchange and settling the sale
As soon as the contracts are exchanged, settlement begins. During this period, everything is finalised - paperwork checked and double-checked, finance approved, and final preparations for the big move begin in earnest. You cannot move in until your final settlement date, which is usually between 30 and 90 days after the period begins.
Even though it may seem like it, buying a home in the ACT doesn't have to be the difficult process you may imagine. With an experienced, professional team to help you, the load is lightened, so contact us today to find out more.