From maximising savings to achieve your first home purchase, to finding the best mortgage and choosing the right suburb to buy into, the list of factors to consider when purchasing your first home can seem never-ending. Here we’ll break down the two options to help you make the right decision for your budget.
Buying an old or established property
Purchasing an ‘old’ or established property refers to acquiring a property that has already been constructed, such as a detached dwelling, a townhouse, or an apartment.
Opting to buy an existing home comes with some benefits. Firstly, you can inspect the property and observe its performance at various times of the day, providing you with a clear understanding of what you will be purchasing. Additionally, if the property has been built for a few years, any potential issues should have already emerged.
Alongside these, some other benefits include:
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Higher land value: Established homes tend to have a higher land to asset ratio. Since the value of land generally appreciates over time, and houses may depreciate, the potential for capital growth can be higher.
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Potential: If DIY’s your thing, established homes will typically give you better bang for buck when it comes to value-adding through renos and other improvements.
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Established resale history: With established properties, you have access to transaction history from previous sales, to help ascertain the movement of property values over time.
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Established infrastructure: Think established gardens, sheds, tanks and fencing which all add value to a property, as does access to amenities and infrastructure like pools, schools, parks and shops in established suburbs.
It's important to note that homes constructed before 2006 were not mandated to comply with the National Construction Code's energy performance targets. The NCC establishes the minimum necessary requirements for new building design, construction, performance, and habitability in Australia, covering safety, health, amenity, accessibility, and sustainability.
In essence, this means older homes may not possess the modern amenities and energy-efficient features that new homes offer.
Buying an existing home may also imply that certain design aspects and fixtures may not be to your liking. You must assess whether you can renovate the property to suit your lifestyle in a cost-effective manner while increasing comfort and sustainability.
Buying a new property
The appeal of a brand new home is an enticing prospect for first home buyers, given you have put away savings for a number of years (sometimes more than a decade!) to achieve the dream of home ownership. For first home buyers a new property can take many forms - from an apartment or townhouse to a new build to house and land packages.
One of the most significant advantages of buying a new property is the potential savings on stamp duty. In many states, first home buyers can receive a full or partial exemption from stamp duty tax. This has the potential to put thousands of dollars back into your wallet which can make a significant difference to your budget when buying your first home.
While an established property may show signs of wear and tear depending on its age, generally speaking with a new property you won't have to worry about costly repairs or renovations for quite some time. An added bonus is vast majority of appliances, features, fittings and house structure will remain under warranty, with home warranty insurance lasting for 6 years and 6 months providing you piece of mind that you won't be hit with unexpected expenses.
New homes are generally more energy efficient than older properties, which can save you money on your energy bills. Modern homes are built to higher standards and are designed to be more sustainable. This can be particularly appealing for first home buyers who are conscious of their carbon footprint and want to reduce their energy usage.
In many states, first home buyers can access a range of government grants and incentives to help them purchase their first home. We will cover these grants and incentives in more detail below.
To help you see the current home loan rates available in the market, use this comparison table:
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.06% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 STAR CUSTOMER RATINGS |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure | |||||||||||
6.14% p.a. | 6.16% p.a. | $3,043 | Principal & Interest | Variable | $0 | $350 | 60% |
| Disclosure | |||||||||||
6.04% p.a. | 6.04% p.a. | $3,011 | Principal & Interest | Variable | $0 | $750 | 70% | |||||||||||||
6.09% p.a. | 6.22% p.a. | $3,027 | Principal & Interest | Variable | $10 | $220 | 80% | |||||||||||||
6.14% p.a. | 6.39% p.a. | $3,043 | Principal & Interest | Variable | $248 | $350 | 70% |
| Disclosure | |||||||||||
6.14% p.a. | 6.19% p.a. | $3,043 | Principal & Interest | Variable | $0 | $600 | 90% | |||||||||||||
6.18% p.a. | 6.21% p.a. | $3,056 | Principal & Interest | Variable | $0 | $845 | 80% | |||||||||||||
6.44% p.a. | 6.66% p.a. | $3,141 | Principal & Interest | Variable | $0 | $0 | 97% | |||||||||||||
6.59% p.a. | 6.59% p.a. | $3,190 | Principal & Interest | Variable | $0 | $160 | 70% | |||||||||||||
6.79% p.a. | 6.87% p.a. | $3,256 | Principal & Interest | Variable | $8 | $350 | 70% | |||||||||||||
6.79% p.a. | 7.16% p.a. | $3,256 | Principal & Interest | Variable | $0 | $0 | 90% | |||||||||||||
5.99% p.a. | 6.51% p.a. | $2,995 | Principal & Interest | Variable | $0 | $530 | 90% |
| Disclosure |
Incentives and guarantees for purchasing old and new
Home Guarantee Scheme
Whether you are purchasing an ‘old’ established property or a new property with the paint still fresh, there are a number of Federal and State government schemes at your disposal to help fund the purchase costs associated with a new home.
The Home Guarantee Scheme consists of three guarantees that can be used for new and established properties. These include:
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First Home Guarantee (FHBG): This scheme offers first home buyers the ability to purchase a home with a deposit as low as 5%, without the need to pay Lenders’ Mortgage Insurance (LMI).
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Regional First Home Buyer Guarantee (RFHBG): This scheme is identical to the FHBG, with the Regional First Home Buyer Guarantee only available to Aussies who have been living in the region they wish to buy in for at least one year.
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Family Home Guarantee: Where the First Home Guarantee and Regional First Home Buyer Guarantee offer the ability to purchase a home with as little as 5% deposit, the Family Home Guarantee allows single parents to purchase a home with as little as 2% deposit.
First Home Owner’s Grant
Where the Home Guarantee Scheme are guarantees facilitated by the Federal government, the First Home Owner’s Grant (FHOG) is facilitated by State governments.
The FHOG is a one-off payment for eligible homebuyers and is tailored to offset the effect of Goods and Services Tax (GST) on purchasing or building a new home. The eligibility criteria and FHOG amount varies across each state or territory and location.
If you are applying for a FHOG through an accredited agent and while in the process of purchasing a home, you may choose to use the grant as part of a deposit.
Choosing old vs new
Navigating between established properties or choosing to take advantage of grants on offer and purchase brand new is a question faced by many first time home buyers. In recent times, there has been very little difference in price points between the two, given the proportion of growth in the property market and lack of building material supplies and trades outweigh one another, seemingly levelling out the playing field.
Ultimately, deciding which option to choose comes down to your personal financial position and whether you can afford to make home loan repayments on either an old or new property. The last thing you want is to stretch yourself beyond your means and struggle to make repayments having saved for a number of years to get to where you are in the first place!
Collections: Buying a home
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