Just $3000 upfront to buy a home

The dream of owning a home has never been a more realistic goal for thousands of renters around the country with figures revealing first-time borrowers can secure their own home for as little as $3000 upfront.

Falling interest rates, more-lenient deposit requirements among lenders and the Commonwealth Government's $7000 First Home Owner Grant Scheme have combined to make the plunge into home ownership an easier jump than ever before. For those in NSW, it gets even better, with exemptions on stamp duty for properties under $200,000 making the dream even more financially attractive.

As rates fall, lenders are more willing to lend on a 5 per cent deposit, rather than the more usual 10 per cent. With home prices up to $200,000 still available in many areas, first-time NSW buyers can buy up to that price on a deposit of $10,000, less the FHO grant of $7000. With no stamp duty payable and loans available without application fees, the all-up deposit needed comes to just $3000 with perhaps some legal costs on top.

Latest figures from the Real Estate Institute of NSW show the most affordable Sydney suburbs are Campbelltown, Wollondilly, Penrith, Blacktown and those in the Hawkesbury region. Campbelltown is the most affordable metropolitan location with a median house price just $176,000.

Buyers in other states not receiving the stamp duty exemption (but enjoying lower property prices) can always borrow a bit more to cover the payment and still secure a home for little more than $3000.

However, first-time homebuyers should also consider the long-term commitment owning a home demands. Buying a $200,000 home on 5 per cent deposit means a loan of $190,000 and $340 a week in repayments at the current standard variable rate of around 7 per cent. This can in some cases be a substantial increase on current weekly rental income.

Source: BankChoice.com.au and the Daily Telegraph, 23/2/01