What do I need to Earn and Save to Buy My First Home?

If you turn to any media coverage about the cost of living and home affordability, it looks like buying a home would be impossible in Sydney at this point in time. The median house price is high, and in general, the closer to the city that you want to live, the more expensive it is. But if you were willing to compromise on size and location, would you be keen to buy your first home?

I thought I would look at an example of an entry price-point apartment in Western Sydney as an example. I found a recent sale of a 2 bedroom apartment with parking in St Marys for 420K. Why did I look at St Marys? Other than me going to primary school out there, I think it is an area with growth opportunities as it becomes a more favourable area to live.

The metro terminal for the Western Sydney Airport line is at St Marys and will be completed next year. This is likely to increase the appeal of living in the suburb, it being an easy commute for workers at the airport and the neighbouring Bradfield industrial park once that is complete.

A large playground and park area has commenced construction near the main street of St Marys, providing quality recreation facilities for the area. Queen St has also been recently rezoned. Buildings can now be built up to 18 storeys and there are plans for the ground level to be a restaurant precinct.

When the council and the government are willing to spend big money on infrastructure and rezone the area, it is a good place to buy.

Now to the numbers.

If you are a first home buyer and qualify for the Australian Government 5% Deposit Scheme you are required to show that you have a 5% deposit saved for at least 3 months. So for the above example of a 420K purchase price:

·         Deposit of $21,000

·         Stamp Duty $0 – As a first home buyer in NSW you are exempt from paying stamp duty for any property purchase under 800K

·         Loan Amount - $399,000

·         Loan repayments on current interest rates of 6.2% - $2450 per month

·         Income Required to Qualify for this loan – 75-80K, assuming no other debts

Does the above look achievable to you based on your current situation?

It doesn’t have to be your forever home but it does give you the opportunity to enter the property market. Once the value of the property increases over time and/or you complete renovations to add value, you could use the equity to buy an investment property, using the equity as a deposit, or sell it and use the tax-free profit towards your next home deposit. If you want to upgrade to a larger home or to an area closer to the city and keep your first home as an investment property, you can do so once the loan amount is no more than 80% of the value of the property at the time that you want to convert it to an investment property. Based on current figures you could rent out the property for $450-500 per week.

If you’d like to find out how much you can borrow to buy your first home based on your personal circumstances and whether you have a sufficient deposit to qualify for the Scheme, please get in touch for a no-obligation appointment either in person or online.

JBL Home Loans 0414670151 jennifer@jblhomeloans.com.au Find JBL Home Loans on Facebook or Instagram