2022 - 2023 First Home Buyers
Tuesday 11 October 22
Preparing For Your First Home Guarantee Application
Right team- It's the magical time of the year again, and I've updated this article to show 2022 numbers and requirements for FHG 2022. This fresh baked batch of FHG (Formally known as FHLDS) places has dropped on the kitchen counter, and I'm here to make sure you don't loose out on a morsel. You can bet the Grace Loans kids are going to be the first ready to snatch those sweet bites. Here's Beth's handy guide to getting your rubber duckies lined up and ready to go for our applications in the 2022-2023 financial year.
#1- Genuine Savings
Make sure you've got 5% of the purchase price in Genuine Savings, plus about $3K for incidentals. The bank will only be looking at the latest 3 months from application of bank statements to verify genuine savings. This means you saved it up yourself from employment income.. no gifts, no super withdrawals, no drug money. Keep it clean y'all.
Calculators out- $500,000 X 0.05 = $25,000 (5%)
Take note that the lender will be checking for evidence that you do not have access to a 20% deposit, or have not in the past had access to a 20% deposit. If they find any such evidence, you will loose your eligibility for the Scheme.
Horror story#1: Children were gifted funds by their parents, but the children gave the money back to the parents. Bank statements showed evidence of the deposit, and they lost their scheme place
Horror story #2: Client had at one stage invested in shares and the value had exceeded a 20% deposit. The bank could see by their withdrawal history on share account that they had at one stage access to a 20% deposit, and they lost their scheme place.
#2 - Living Expenses
I hope you've been sticking to your budgets! For your maximum loan, you need to keep your expenses to a minimum. Here's a rough spending guide if you've forgot the specific budget we discussed in our meetings... If you haven't had a meeting yet, book one in fam.
Here's a rough guide for individuals on a $70,000 salary in NSW;
Single applicant- $1,500 per month
Couple- $2,500 per month
Couple+1Ankle-biter- $3,000 per month
Couple+2Ankle-biters- $3,200 per month
Anything you have spare after living expenses goes to savings. The combination of your rent plus savings needs to equate to your future mortgage repayment.
Calculators out- A $500,000 mortgage is about $2,300 per month at 4%
If you spend $1,500 on rent, you'll need to be saving at least $800 per month to prove to the bank you can afford your new potential loan repayments
#2 -Credit cards and other debts
Cancel those credit cards, Harvey Norman store cards, AfterPay's etc. If you can't cancel, reduce the limits to $1,000 or less for the maximum borrowing power. HECS debt? -Don't worry, just don't forget to declare it and take a screenshot of your MyGov portal to prove the balance!
Car loans and large personal loans? -Those are a problem, you'll need to have those paid out and closed unless you're earning, like... Mayweather money.
Home Guarantee Scheme applications need some really specific documents that aren't required for other mortgage loans such as;
- 2022 NOA available from MyGov>ATO Note: This is different to your PAYG Payment Summary
- Medicare Card
- Citizenship docs or Australian Birth Certificate
- 3 months Bank Statements to prove genuine savings (but no more than 20% of the purchase price!)
- Screenshot of your HECs balance from MyGov
I have an excellent conveyancer who will make all the difference to your stress levels. Hit me up for their contact details once you've found a property. They won't cost any more than your Dad's conveyancer but they will go the extra mile and might even save your life... Fo real tho
I'm super excited to get you all into your new homes this year, the timing has never been better with even more scheme places available and also the new Regional First Home Buyers Guarantee too!
P.S. I also have an epic Chocolate Chip Cookie recipe, shoot me a line and I'll share it.