Let's face it, the hardest part about getting onto the property ladder is saving for that initial deposit. Most commonly, individuals are required to stump up 20% of the purchase price which would equate to $120,000 for a run down apartment in Sydney valued at $600,000.
From January 1, 2020 there will be 10,000 lucky first home buyers who will have the chance to enter the property market with as little as a 5% deposit.
In the above example, you'll need $30,000 to secure that $600,000 property, sound too good to be true? There are a few catches as always; - singles income must not exceed $125,000
- couples income must not exceed $200,000
- Property purchase price must be less than $700,000 for purchases in Sydney
- Only 10,000 loans will be supported each year
Don't get caught out in thinking you've just saved yourself 15% of the purchase price. Using the example above your loan will increase from $480,000 to $570,000 and accordingly the repayments will increase from $516 to $613 per week based on a 3.79% Principal & Interest loan
The amount of funds require up front drastically falls allowing many to get into the market sooner and taking more advantage of the power of leverage (controlling a large asset with minimal personal funds).
What will the increased capacity of first home buyers do to already climbing property prices in the Sydney market? Will we see another round of FOMO and is NOW the time to get yourself in?
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