a picture showing first home buyer investment property
Mortgage Specialist

First-time Buyer Considering An Investment Property?

First-time Buyer Considering An Investment Property?

It is not unusual for some first-time buyers to purchase a property as an investment. For many, it can be a way to get a foot on the property ladder, especially if they can live rent-free somewhere else.

There’s More to Pay Than The Purchase Price

While it makes sense to buy a property and have someone else pay your mortgage, it isn’t quite so simple. There are extra ongoing costs you need to consider, such as agency fees, landlords insurance, strata fees and council rates. As long as you can rent the property at a rate that covers all your costs, there shouldn’t be a problem.

However, buying an investment property will exclude you from many of the first time buyer incentives currently on offer. Effectively you are passing up free money!

Owner-Occupier vs Investment

Consider this; if you buy a $500k home as a first-time owner-occupier in NSW, you can claim $10k under the First Home Owner Grant. You are also entitled to a waiver on stamp duty under the First Home Buyers Assistance Scheme. On a $500k home, this is a saving of $18,267.60. That means you will make a total saving of $28,267.60, making the full purchase price $490,000.

Now, if you buy the same home as an investment property, you are unable to claim under either scheme. The total price would then be $518,267.60. To cover the cost of your mortgage repayments, you would need to rent the property for roughly $550 per week. So, the money you save as a first-time buyer is equivalent to 13 months rent!

Best of Both Worlds!

The smarter option in this scenario is to buy the home as an owner-occupier. But, if you still want to buy an investment property, why not use the system to your advantage. You usually need to live in a property for 6-12 months to claim the first-home buyer savings. So you could live in the home for the minimum amount of time and then rent your property out as an investment. This way you get the government assistance and can still have someone else pay your mortgage!

100% mortgages for first time buyers

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *