You’re determined to build your dream home yourself, rather than use another builder.

This is absolutely possible if you’re a builder and have experience in constrcution. If you opt for an owner builder construction loan, you’re in control. However, you should be aware of the responsibilities, benefits, and risks that come with it.

Today we’ll discuss owner-builder construction loans, the cost estimates, and the application process for your home loan.

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Who is an Owner-Builder?

Let’s start with the definition of a person with the “owner builder” title.

An owner builder is a person that owns the land on which the house is going to be built and also participates in the process as a “general contractor”. NSW Fair Trading releases permits for these if the construction is more than $10,000 and requires development consent from council.

Owner builder loans require a certain degree of prior knowledge of building and construction, which is why only a few lenders provide this type of facility, and often with strict parameters.

However, if you have the experience lenders require, this home loan will prove to be very cost-effective, practical, and rewarding.

Owner-Builder Job Description

As the owner builder, first, you will be responsible for creating a budget for your construction project. But this is just a surface layer of your building contract.

Owner builder’s day-to-day responsibilities include:

• Obtaining the required business permits for the job
• Purchasing materials for the construction projects
• Scheduling and using licensed tradespeople and contractors
• Avoiding delays
• Preventing conflicts of any nature
• Distributing funds

Are you supposed to work in construction as well?

Owner builders are seen by NSW Fair Trading as people who have the skill or capacity to build their own house or supervise construction and building.

Owner Builder Skills Required

If you’re interested in taking up such a responsibility, let’s glance over the required skills. Here’s what you need to be good at:

Construction Skills

Construction-related skills are the first skills you need to master if you want to build your own home. Naturally, this means you know how to get around the construction site and operate the machines and equipment, supervise licensed tradespeople etc.

Financing Skills

The second skill is related to finance, of course. Since you are the head of construction, it is up to you to determine the build cost that will be respected during construction. Also, you should consider potential overruns and damages that may occur during the process.

Don’t leave anything to chance.

Leadership Skills

Another vital skill you should have as an owner builder is leadership. Again, you’re project manager here, so you’ll need to know how to delegate responsibilities properly, with clarity, and without causing confusion among contractors.

Applying For Owner Builder Loans

Generally speaking, there are more stringent requirements to obtain an owner builder loan. This is primarily because of the risk factors associated with owner builder projects, what’s seen as higher risk than typical home loans due to the lack of impartiality between owner and builder.

Working with a mortgage broker to find banks and other lenders who will be amenable to an owner builder loan, whether there are any specific conditions for the loan approval (eg do you need to be a licensed builder), whether you should seek pre approval are all important before you start construction.

Here are some basics on home owner building loans.

Create A Business Plan

Engaging in an owner builder project requires a lot of planning. Building a house is a complex project, to say the least, and you’ll have to develop a business plan before you even begin the construction.

Your business plan should have the timeline outlined, as well as the following points:

• Required permits
• Council Approval
• Licensed builders & tradespeople
• Material costs
• Labour fees
• Cost estimate

Qualify for A Owner Builder Loan

The next step is the qualification process. Lenders offering builder loans will have to look into your financial history to ensure your experience, financial position, and the likelihood of success. The checklist they’ll be going through includes the following points:

• Your income
• Credit score
• Cash reserves
• Debt-to-income ratios

Besides the points we’ve covered, the lenders will likely require your money first in the build. A bank valuer will also inspect the plans, conduct a valuation on the property as is and on completion. Concerning this, the business plan you’ve outlined indicates that you know what you’re doing.

Upon Loan Approval

Say your loan application went successfully and the loan approved. Now, it’s time to gather the contractors and officially start the process of building your home, standard construction commencing.

Should I Seek Pre Approval?

Yes, and here’s why.

The process is quite complex, and therefore, it requires serious technical as well as coordination skills. Getting pre-approval will allow you to have a better insight into the maximum loan amount, any conditions, additional funds required, etc. Many lenders do offer pre-approvals, and your mortgage broker can assist.

Is An Owner Construction Loan Expensive?

People assume that because there are limitations regarding the approval process, these loans tend to be more expensive. In truth, their price is in the same range as other mortgages.

What Are Progress Payments?

Progress payments are payments made to the owner of the property by the lender. The Progress Payment Schedule will outline the details regarding the stages and percentages in which these payments will be made.

What About Partially Built Homes?

Should you fall in to difficulty through the build, many lenders won’t entertain a construction loan/refinance mid-build. There are other lenders and second-tier financiers that may assist in these special circumstances.

The Pros and Cons of Owner builder Home Loans

Pros

When you’re building your own home, you have the opportunity to create significant equity by reducing the costs that would be paid to a third party, holding at completion, or even selling the property once you’re done with the project.

Being an owner builder and engaging in this process enables you to save money.

Cons

One of the main disadvantages of this type of loan is obtaining it. Owner builder loans definitely require a lot more paperwork and specifications than other home loans. Considering the limitations, many people prefer to hire another licensed builder rather than do it themselves.

Another drawback to this is that some lenders will not provide owner builder finance, and most banks take a more stringent view.

Steps To Becoming an Owner Builder

1. Obtain A White Card

The first step to conducting works on your property and becoming an owner builder is obtaining a White Card (also known as a current general construction induction training card). This is simply a document that all construction workers in Australia are required to have in their possession when the work is valued at more than $20,000.

In other words, this is evidence that you’ve successfully completed a General Construction Induction Course, i.e., the White Card course. Besides owner builders, surveyors, site managers, and labor workers are all required to have this document with them.

Owner Builder Training Courses typically last from 3 to four weeks; however, the length of these courses may vary in time. The Registered Training Organisation will provide a range of courses.

2. Obtain A Certificate of Consent

The next step involves obtaining a Certificate of Consent. This is particularly important if you’re not a registered builder or your construction exceeds $16,000 in cost estimates.

Before you start, you’ll need council approvals via development consent or complying development certificates (CDC).

3. Apply for a Permit

Before starting the construction process, you might need to apply for relevant permits with your local council – a planning permit, building permit, or occupancy permit. In some cases, you’ll have to apply for all three.

Here, it’s important to note that you should contact a building surveyor to issue the building permit and occupancy permit upon completion.

4. Hire Contractors & Sign Contracts

Since you are the one delegating responsibilities and creating the plan, the next step is to hire licensed contractors who will do the work on your property, be it your own home or an investment property.

These are some jobs you need to keep in mind: grading and site preparation, roofing, installing windows and doors, plumbing, etc.

Working with other contractors and tradespeople involves entering into contracts. You’ll need to agree on working hours, plans in more detail, and payment methods. A quantity surveyor can help you estimate control costs for your project.

Extra tips: 

Check if your contractors are working under insurance. Public liability insurance helps you cover third-party injuries. Also, one idea is to look at Owner Builders – Latent Defect Insurance. It helps you with unforeseen structural defects for a partially built home or should rectifying work be required.

5. Organize Inspections

Even if you’re not required to be present on the construction site 24/7, a wise thing to do is organize inspections every now and then to oversee the works. This will help you maintain peace of mind and have an insight into the progress that’s taking place on your property.

Final Thoughts

We’ve successfully closed the topic on owner builder loans, how they function, cost estimates, and what are some of the pros and cons of this funding process.

Primarily, an owner builder home loan represents an opportunity for people to participate in the construction project of their new home. Most lenders require some history in the construction industry.

Once you’re approved, the lender will release funds via progress payments to the owner builder.

Taking on a construction loan involves a lot of planning, budgeting, ensuring that the project is viable.

If you’re interested in buying land and then building on that land, another option is to inquire about house and land packages.

The First Home Loan Deposit Scheme, now known as the First Home Guarantee Scheme, was initially constructed to help eligible first home buyers get in to their own homes sooner.

However, this scheme can be challenging to grasp, especially considering most first-home buyers may not be experts in the property market or the homeowner grants that might be available to them. That is why we have compiled the ultimate guide to help you gather all the information about the first home loan deposit scheme.

Continue reading for the full scoop on the FHLDS!

What Is The First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme is the Australian Government initiative for eligible home buyers, allowing them to get a home loan for their first home much sooner. From July 2021 until the end of June 2022, 10,000 places will be available in the First Home Loan Deposit Scheme, and then from July 2023, this is expanded to 35,000 placess.

This initiative was initially started because most first home buyers had to pay lenders’ mortgage insurance if they could not afford a 20% deposit. Given the cost of property has continued to increase over the years, the FHLDS was a way of reducing the costs to buyers. So, under this scheme, the first home buyer’s home loan will be guaranteed by NHFIC to the lender.

The goal is to allow, for example, eligible single parents to buy their first home (not first investment property) with as little as a 5% deposit. The scheme allows Australian citizens to get approved for a maximum of 95% of the property value, per the lender’s assessment. Note that this is simply a guarantee for the home buyer, as it’s not considered a payment or a deposit. It is just reducing the cost by cancelling the need for lenders mortgage insurance.

The government of the Commonwealth issues guarantees for the difference between the home deposit and the 20% deposit required by most lenders, so the first home buyers don’t have to pay for the lenders’ mortgage insurance, thereby reducing costs to purchase.

For example, if the 20% deposit is $120,000, and you only have $70,000 – the government will guarantee the amount between 80-95% of the purchase price to ensure you don’t pay LMI. You still need to take and be approved for a loan for this amount, it simply reduces the reliance on lenders mortgage insurance.

Despite this scheme not being a cash payment, many eligible first-home buyers may also be approved for other Australian government schemes if eligible for the First Home Loan Deposit Scheme. Many first home buyers utilise the First Home Super Saver Scheme, First Home Owner Grant, Home Builder Grants, stamp duty concessions, and various other schemes that State and territory governments offer. Keep in mind that different eligibility criteria apply for each of these schemes.

First Home Loan Deposit Scheme – New Home Guarantee

The recession resulting from COVID led to the government looking to help Australian citizens more, so the First Home Loan Deposit Scheme was expanded during this period and worked similar to the FHLDS. The New Home Guarantee provided an additional 10,000 places in each of the past two financial years for buyers looking to purchase newly constructed builds, off the plan purchases, house and land packages.

It works the same as the original First Home Loan Deposit Scheme, but it has limitations – it cannot be an existing house; it must be a new home. So, the buyers can buy their new home or build it on vacant land exclusively, and they can use the home guarantee to get a home loan with a 5% deposit. The same rules apply – the eligible first home buyers under this scheme are not required to pay the lenders’ mortgage insurance.

In the financial years 2020 and 2021, there were 10,000 available to purchase newly constructed dwellings.

What Is A ‘First Home’ According To The Australian Government?

For the new homes to fill the eligibility criteria, they have to be:

• newly constructed dwellings such as a townhouse, apartment, or a freestanding house
• house and land together
• off-the-plan dwellings such as a townhouse, apartment, or a freestanding house
• vacant land with a separate contract for building a new house

To fill the eligibility criteria, the Australian citizens buying newly constructed dwellings must be eligible first home buyers. People with existing property do not fill the criteria to use the New Home Guarantee.

Can I Apply For The First Home Guarantee?

It’s pretty simple to apply for the First Home Loan Deposit Scheme – as the eligibility criteria include:

• being an Australian citizen over 18 years of age
• if you want to buy as a couple, the other person must be the spouse or registered partner (not a family member or friend)
• cannot have owned residential property in Australia;
• be under the salary cap;
• purchase under the property cap

Below, you will find the detailed guide for the other requirements, so read carefully with all the information about the homeowner grant.

1. Property Criteria

First Home Guarantee is more straightforward than the New Home Guarantee, as the first home buyers can purchase a new or existing home without voiding any of the requirements listed by the Australian government initiative.

To apply for the ‘New Home Guarantee’, the first home buyer will have to build a new house or purchase a new house or apartment without the ability to acquire an existing house.

Another thing regarding the property is the property price threshold or the limit on the residential property value the eligible first home buyer can buy. It all depends on the State and Territory governments, along with the property’s location – whether it’s metro or regional.

Regional centres, for example, are any centres with a population of over 250,000 people. Some of the regional centres in the scheme are the Sunshine Coast, the Gold Coast, Geelong, Newcastle, and Illawarra. Some of these regional centres have a different property price thresholds, so check if you can apply for the first homeowner grant. Buyers also need to ensure they purchase under the property cap for that area, so it’s important to be aware of what the limit is.

1. Buying Alone Or In A Couple

As mentioned, you can apply for the First Home Guarantee alone or with your spouse or partner. However, the couples must be married or in a de facto relationship. If you are in a different relationship, you will not fill the eligibility criteria – so you cannot apply with a friend or a family member for example.

2. Salary Cap

If you are buying alone, instead of as a couple, you will have to earn less than $125,000 in the last financial year to apply for the First Home Loan Deposit Scheme. For couples, the salary cap is set at $200,000 combined taxable income in the previous financial year. This is verified against your notice of assessment for the year.

3. Deposit Levels

The government initiative was to assist Australian citizens buying their first home, whom otherwise may have put off buying for a few years due to the cost of LMI, but you will have to have, at the very least, the 5% deposit. The minimum is set at 5% because, according to the government, this demonstrates some level of savings.

4. Principal and interest loan repayments

The home loan must be a principal & interest home loan during the time frame of the government guarantee. The only exception to this rule is if you are buying vacant land to build a new home over it. If that is the case, you can apply for an interest-only home loan during the construction of your new house.

The last thing to remember is that you will have to be an owner-occupier for the home loan guarantee. The purchased property must be owner-occupied, or the guarantee will not be viable. If you move out and it becomes an investment property, the guarantee is no longer in effect.

Other Eligibility Requirements

Besides Australian citizenship, you will have to consider plenty of little things before contacting the participating lenders. Before you read the following eligibility criteria, you will have to think whether climbing the property ladder using the First Home Loan Deposit Scheme is the right idea.

After that, you must check the participating lender home loan requirements. Despite the government guarantee, your home loan will go through the same credit application like any other home loan. So, if you cannot meet income, expenses, and credit history requirements for an approval, it may lead to issues in receiving an approval.

Think about your savings – and how high they are. The First Home Guarantee requires a demonstration of savings expressed as the 5% deposit or down payment.

After all, you will have to consider the upfront costs of buying a home – such as stamp duty and other expenses. Some state and territory governments offer significant discounts for stamp duty for eligible first home buyers, but you should understand what your stamp duty costs would be.

Lastly, consider other alternatives should the dream home not fit the FHLDS criteria. You might be better off saving for a large deposit or paying LMI.

2022 Federal Budget Update

In 2022, the government announced an expansion of the Home Guarantee program, with 50,000 places in three programs. The three programs are called the First Home Guarantee, Family Home Guarantee, and the Regional Home Guarantee. The Regional Home Guarantee is an entirely new program, and it’s designed to target specific regions and stimulate home buyers to purchase homes in those regions.

The First Home Guarantee has expanded to 35,000 guarantees annually from the 2022/2023 financial year. This is a significant expansion compared to last year when the government issued only 10,000 places.

The Family Home Guarantee offers 5,000 places now, compared to 2,500 places last year. This guarantee will last at least until 2025, allowing single parents to purchase a home with a 2% deposit, along with the upfront costs.

The Regional Home Guarantee is a new program that will include 10,000 places for eligible applicants who want to purchase their new home in regional Australia. The program requires a minimum deposit of 5% plus the upfront costs, such as stamp duty concessions.

This initiative is specific because it’s not reserved exclusively for first-home buyers. However, the applicants cannot own a house, and they must not have a place to their name in the last five years.

Final Thoughts

The First Home Loan Deposit Scheme can be a great way to reduce the need for the large deposits most properties require today. This might be the ideal program for you if you are looking for a house and cannot easily save a 20% deposit.

However, if you need help applying to this or any other program, such as the Family Home Guarantee, let us know so that we can walk you through options and any government programs that you would be eligible for.

Contact us today and get your home sooner than you think!

Meta description: First Home Loan Deposit Scheme Ultimate Guide – what do you need to know? What are the eligibility requirements? Read our article for all the information!

However, the actual use of superannuation and these retirement benefits has changed over the years.

Today, people have many people are choosing to use their retirement savings to invest in a wide range of types of assets. One particular question that often comes up is how to buy a house or an investment property, using these funds.

So, can you actually use your super account to buy property, and if so, how does it work, and what are some advantages and disadvantages to this option.

What is a Self Managed Super Fund?

A Self Managed Super Fund (SMSF) is a means of saving money that you plan on spending during your retirement years. It’s still superannuation, it’s just when you have all the control rather than having your savings through a large superannuation provider.

With an SMSF, you choose the investments, the strategy, the insurance, and all decisions of the fund. You’re in control.

Moreover, a Self Managed Super Fund can have up to six members. This has been an increased change from 2021, where previously the maximum had been four members and may work for larger families. An SMSF will usually have individual trustees, but many accountants and advisers may recommend a corporate trustee instead. Most funds have no more than two members, as they’re often a de facto or married couple’s fund.

As this is a private fund, you do get the benefit of having control and making your own decisions, but likewise, it involves a lot of work, time, and motivation to stay on top.

Setting Up The Fund

To set up the fund, you’ll need both time and guidance from a professional adviser or accountant.

Even if you rely on professional assistance and advice, it’s still a lengthy process. Besides the time that you will spend setting up the fund, you’ll need to set aside time for:

• Researching different investments
• Setting and following an investment strategy
• Accounting activities, keeping records
• Understanding your options around insurance if appropriate
• Arranging an audit every year (by an approved SMSF auditor)

Some estimates suggest that it can take up to eight hours a month to manage your self managed super fund successfully. Likewise, the set-up costs can be substantial, which is why the ATO recommends a significant opening balance before considering an SMSF.

As you may have guessed from the activities above, some of these costs include:

• Setting up the fund
• Investing
• Accounting
• Auditing
• Tax advice
• Legal advice
• Financial advice

Responsibilities and Risks:

The responsibilities of managing an SMSF fund come with certain risks:

• You are liable for all of the fund’s decisions.
• Your investment strategy and decisions may not result in high returns.
• You are responsible for managing the fund even if things change
• Relationship breakdowns (sickness, death)
• No access to any type of compensation scheme should you lose money by theft or fraud
• The potential loss of insurance benefits by moving from a retail or industry fund to SMSF (seek professional financial advice)

As you can see, there are a lot of factors to take under consideration before deciding on whether an SMSF is right for you, and advice from licensed professionals is a must.

Expanding further, if you’re looking to use your SMSF to purchase property, you also need knowledge of the real estate market on top!

SMSF Borrowing

This is where the situation can get a little (more) complicated.

The conditions that include SMSF borrowing are outlined in the “limited recourse borrowing arrangement (or LRBA). What’s important to highlight here is that each property/purchase can only be used when you are planning on buying a single asset, be it commercial or residential property when you’re looking to borrow money for a purchase. A separate asset called a bare trust is set up to own the property on behalf of the self-managed super fund. Ultimately, if you default or can’t pay the loan, the lender only has the right to go after the property asset itself, rather than the rest of the assets held in the SMSF. If you want to buy a second property, you’ll need another LRBA to be set up for each and every additional property that needs to be financed.

Some of the risks associated with SMSF borrowing are cash flow, holding enough money to successfully perform all operations, as well as that the rules around SMSF and superannuation change on a regular basis, so what may be worthwhile and appropriate today may not be in a few years’ time.

Also, you will not be able to make any substantial changes or improvements when using bank or lender funds. Whilst repairs and maintenance are acceptable, building out, extending, and largely improving the property is not allowed under an LRBA.

Can I buy my own home through an SMSF?

“Can I use my super to buy a house” is one of the first questions we often get asked when clients are interested in using their retirement savings towards property, and the answer is yes…and no.

You can use super to buy a house, but it can’t be the house you live in yourself (be that a home, holiday home etc). The type of property (apartment, house, townhouse, warehouse) is not the issue, it’s the purpose of the house itself that is relevant.

So, yes, you can buy a house, just not to personally live in.

What else should I know about Superannuation?

Even though the idea of calling on your super to buy an investment property may be appealing, unfortunately, this is not an option that is open to everyone given the costs and eligibility associated.

If you’re looking to physically withdraw funds from your super account and use them for buying a house, you need to be eligible, with one option being the First Home Super Saver Scheme.

Essentially, there are three groups of house buyers that are eligible, and they include:

First Home Buyers

First home buyers will most likely be granted access to their super account under certain conditions.

This is done through the Federal Government’s First Home Super Saver Scheme (FHSS).

Within this option, it is essential for the home buyers to bear in mind that they are only allowed to make use of their voluntary contributions, and NOT the compulsory contributions that are officially made by the employer.

First Home Super Saver Scheme: A Guide

The First Home Super Saver Scheme (FHSS) was first brought up by the Federal Government back in 2017. The point of this scheme was to lower the pressure tied to housing affordability.

Australians looking to save for their first home could make extra voluntary contributions into the super account. According to the Australian Taxation Office, this helps first-time house buyers to save money faster, as you’re reducing your taxable income, thus the higher the tax rate that you’re on, the more the benefits potentially can be.

Post the most recent budget, buyers are eligible for up to $50,000 as a maximum releasable amount, which has increased from $30,000.

You will need to request a release and have the ATO make a determination of your release. Lenders understand this process and can count the FHSS towards your own deposit and funds to complete.

How much money can you count on?

Broadly speaking, first home buyers can count on up to $30,000 of their voluntary contributions, which they can afterwards use to add to their home deposit. This is realized either through pre-tax contributions, or contributions made after-tax benefits.

Property Investors via SMSF

The next eligible group are property investors.

This implies being a part of the Self Managed Super Fund (SMSF). Fund members are allowed to utilise their superannuation towards property, investing in real estate.

An SMSF property loan is provided by lenders to help you leverage finances and invest in real estate. SMSF property loans are tailored to provide financial help to trustees, and since this is a complex process, it is recommended to seek legal independent advice as well as advice from your financial adviser before applying.

Retirees

The group for which superannuation is primarily intended are retirees, and they make up the next group of people who are eligible to use this money to buy property.

Ultimately, you don’t have to be retired. You will get full access once you reach your preservation age.

The “preservation age” is determined by the ATO, and it’s based on your birth year. The “preservation” refers to your super fund being a “preserved benefit”.

The minimum preservation age stands at 55 if you were born before July 1st, 1960.

Lump-Sum or Pension

Retirees can decide to take their superannuation out as a lump sum, or to take it as a pension payment each month, quarter, or year. It’s crucial to get advice on what is right for you.

Property Market Rules

There are also certain property-related requirements that should be met. They include that the property you want to invest in must be an investment property:

• Not be lived in by the fund member or related parties
• Not be rented by the fund member or related parties
• Not be acquired by the fund member’s related parties

Furthermore, if your super fund is used to purchase commercial property, only then can it be leased to a member for business purposes.

For more details on rules regarding your SMSF, refer to the Australian Taxation Office website.

The Sole Purpose Test

Your SMSF or superannuation will need to meet the sole purpose test to ensure it can receive the tax concessions under SIS legislation. The sole purpose test outlines that super is providing retirement benefits for its members.

I’ve been told I can salary sacrifice to my superannuation?

A superannuation salary sacrifice is a legal agreement between you and your employer, where he allows for a portion of your pre-tax salary to be transferred into your SMSF or super fund.

Seek professional advice before undertaking this.

Pros and Cons of Using Super in Buying Property

If you’re dwelling on using super as a way of breaking into the property market, here are some pros and cons that you should consider before making the final call. One pro and con of each

Pros:

Probably one of the biggest pros to using your super to buy residential or commercial property is that you will step into the property market via a different channel. This may mean for some people get into the market earlier, and this is especially useful when it comes to the constant fluctuations and rising house prices.

Cons:

Finally, being a member of the fund and withdrawing money from your account does not necessarily mean that you will qualify for a loan. The credit provider will first have to take into account multiple factors before loaning you the finances.

So can I use my super to buy a House?

It’s not impossible, it just won’t be your own home if your superannuation itself is going to hold the property asset. If you’re looking to buy your own home, you have some other alternatives:

Get a Guarantor

The first option would be to try buying a property through a guarantor loan. If your family has a property they’re willing to use as security, that may help you get into your first home sooner. However, a guarantor must have:

• Equity in their current property;
• Understand their rights and obligations as a guarantor;
• Preferably, use an investment property rather than their own home

Buy With A Partner

You can always choose to buy a house with your partner or family member.

Ensure that both of you share the same view on this. You’ll have to go through an ownership contract, and have a planned exit strategy in case things get complicated.

Grow Your Deposit

It’s also possible that you just need a bit more time to grow your savings. Manage your budget, and speak to your mortgage broker about your options in savings so that you can buy a house quicker.

The FHSS scheme

As discussed above, this can be a great option if it suits your circumstances and can allow you to be a home buyer sooner.

Lenders Mortgage Insurance

LMI is there for a reason. It provides purchasers with a way of getting into the market sooner than they otherwise could, in exchange for payment of an insurance premium that protects the bank’s position. Whilst it can be costly, it can also shave years off the purchase date for that first home.

Final Thoughts

So… yes, you can use your super in order to buy a house. However, there are a couple of factors you need to take into consideration before you agree on this.

In years gone by, self-managed super funds were primarily used as a retirement strategy for those people that wanted more control over the investment strategy of their retirement funds. However, today’s purpose of these funds includes property investment as a potential asset class.

As of July 1, 2022, the FHSS scheme will allow a withdrawal of up to $50,000 for eligible applicants.

If you’re looking to buy a property through super, it must be an investment property, and likely through an SMSF.

If you need a loan for your property purchase, a bare trust will need to be set up, and a limited recourse borrowing arrangement (LRBA) would need to be in force.

Super is there for your retirement savings, so any investment strategy and purchase should be sure to meet the sole purpose test.

Always get professional accounting and tax advice to ensure you’re doing what’s right for you.

Meta Description: If you’ve been thinking about using your super account to buy property, understanding how an SMSF can work is essential when partnered with professional advice.

We’re at an age where many people are becoming more socially conscious consumers. Society is becoming more considerate about global warming, climate change, and human activities that affect our environment. But many people have never stopped to think about how these activities are often funded.

Banks can play a significant role. When you have savings, banking institutions pay interest so that you will save your money with them. These same banks then charge higher interest from individuals willing to borrow money by way of home loans or personal loans, credit cards, and business loans. This is often referred to as net interest margin, and is a key metric that banks are often judged by. To maximise shareholder value, many banks lend money to businesses that are invested in the fossil fuel industry and the gas sector. 

Research by Market Forces shows that as at 2016, the major banks in Australia invested more in the fossil fuel industry than in renewable energy, often several times over. In doing so, these banks create an unsustainable finance roadmap that doesn’t assist, and may actually adversely affect climate change. 

Some banking activities lead to gross environmental degradation, but there are other banks invest in climate-friendly projects. Ethical banking services also include business practices with mindful lending criteria that positively affect the economy. 

And although ethical banking may not be the first priority that comes to mind when you’re looking for a home loan, now’s a great time to start thinking about it. If you’re interested in doing your part, you can engage in values-based banking by making a socially responsible investment for the planet’s health. 

A socially responsible Australian bank can reduce our carbon footprint and, at the same time, many lenders are finding that it creates a sustainable business model for their shareholders, and a positive experience for homeowners looking for a mortgage. 

To start, we will discuss what ethical banking is before looking at examples of ethical banks in Australia.  

What Is Ethical Banking? 

There is no agreed-upon definition of ethical banking in the banking sector. But here are some things to think about when a bank makes mention of them being an ethical lender.  

• An ethical bank is socially responsible and practices values-based banking, promoting a sustainable future. 
• An ethical bank does not lend money to fossil fuel companies and the coal and gas sector. 
• An ethical bank’s operations do not extend to deforestation, animal cruelty, and weapons. 

Rather, an ethical bank strives to operate in an environmentally responsible manner. Apart from banks, some political organisations understand the essence of environmentally friendly projects.

Who Cares About Ethical Banking?

More and more people are starting to understand the direct impact that their day-to-day choices lead companies and banks to focus their efforts on. Millenials and younger Australians are more involved in choosing to support companies that align with their own individual values. As a demographic, this group of people continue to build their wealth and become more of a juggernaut to be reckoned with. It’s also expected that many will inherit large sums of money in the decade to come, and as such, the purchasing power they hold grows more and more each day. First home buyers and expats are often the keenest to understand the sustainable lender options available to them.

Does Ethical Banking Mean Higher Fees?

Not at all. There’s no evidence of banks who have a more socially responsible outlook charging higher fees or interest rates to their customers. Adding to this, the number of banks and institutions who are signing on to environmentally friendly policies suggests that there is a growing market that’s being swayed towards sustainability.

Most Ethical Bank Australia 

Market Forces provides a track record of where each bank and lender provides funds. They provide a very detailed list on their website and are a great place to start. Further, there is only one Australian lender that has made the honour roll for the Ethisphere Institute. These are businesses whom do not invest in fossil fuels and are ethical companies that have made a global alliance to protect the environment.

Teachers Mutual Bank 

Teachers Mutual Bank was once a credit union before it became a mutual bank. It practices a world-leading ethical business. This lender ticks all the boxes and has been described as one of the world’s most ethical companies by the Ethisphere Institute. This bank is the only Australian bank to be nominated by the Responsible Investment Association Australasia as a responsible investment leader.

Teachers Mutual Bank makes a responsible investment in environmentally friendly resources.

Their investments include solar panels, green cars, rainwater tanks, and greywater treatment systems. 

UniBank, Firefighters Mutual Bank, Health Professionals Bank, and Teachers Mutual Bank are part of the Teachers Mutual Bank Limited. These branches of Teachers Mutual Bank Limited combine for over 220,000 members and they strive to practice fossil fuel exclusion and ethical and social responsibility. 

Other Ethical Banks Australia

Whilst by no means a complete list, here are a small selection of lenders that practice what they preach when it comes to sustainability practices.

Adelaide & Bendigo Bank

Bendigo Bank always mentions investing in society, and it always does so. Bendigo Bank makes a conscious effort to reduce its contribution to global warming and climate change. And the bank makes it a point not to invest in fossil fuels or the coal and gas sector. 

AMP

AMP released a statement to Market Forces stating that AMP “does not provide business or corporate banking services to industries” relating to fossil fuels.

Auswide Bank

Auswide might be known as sponsors of the Queensland Rugby League team, but they are a leader in environmental and social sustainability. They note they are committed to protecting the environment in both their banking and operating practices.

MyState Bank

A Tasmanian bank with a national footprint, MyState doesn’t invest in any coal, gas, oil projects.

It is also worth noting that National Australia Bank and Westpac have been on Ethisphere’s list of sustainable companies in years gone by, but not in recent years. These results were decided by these banks’ involvement in the following factors. 

• The revenue they make from clean services and products.
• The number of resources they use for energy and water 
• The number of women they have in executive management
• Employee or management time and how those in executive management show excellence, practice social responsibility 

These two banks might be involved in fossil fuels, but their activities show that some profits have come from clean services.

Green Banking In Australia 

The following banks uphold a sustainable finance roadmap so the environment can be protected where possible from global warming. The following financial institutions offer services for consumers that utilise products such as solar hot water systems that promote low carbon transport.  

Commonwealth Bank – Green Mortgage Initiative

This scheme encourages environmentally conscious Commonwealth Bank mortgage holders to implement practices like installing solar panels. When you take up these climate-friendly projects, you receive cashback offers and other incentives for your decisions. 

Bendigo Bank Green Home Loan and Secured Green Personal Loans

Bendigo Bank was one of the very first lenders to look at rewarding clients who were using energy efficient services. In March 2022, they reached a 20 year celebration of environmentally friendly purchase assistance by offering bigger discounts on loans for solar panels, batteries, electric vehicle charging stations, and solar hot water.

Bank Australia – Car Loans For A Cleaner Planet 

Bank Australia issues car loans that are planet-friendly loans. They offset your emission estimates for the period the loan will last under the National Carbon Offset Standard. On top of that, Bank Australia covers all electricity costs that you might use from the grid.  

Bank Australia also has a Clean Energy Home Loan plan that rewards customers who buy high-standard energy efficiency homes. If your home meets their requirement, the home loan plan might give you a discount.

U-Bank Green Term Deposits

As a subsidiary of the National Australia Bank, U-Bank holds wholesale funds for investment in solar and wind energy, low carbon transport, and buildings.

You might be wondering why your bank is not included in the lists of banks that do and do not invest in fossil fuels. Well, the reason is that it could be a subsidiary of some of these banks. Let’s take a look at some of them. 

Subsidiaries Owned By Banks That Contribute to Climate Change 

• Bankwest is owned by Commonwealth Bank, and it funds fossil fuels activities. 
• UBank is a subsidiary of NAB, and it funds fossil fuel industry and activities.
• St George is owned by Westpac, whom fund fossil fuel industries
• 86 400 made a statement on the 3rd of February 2020 before NAB acquired it. The bank stated that it wouldn’t lend its money to industries involved in fossil fuels. But on the 19th of May 2021, NAB, which invests in fossil fuel, acquired 86 400. As at June 2022, 86400 has now been rebranded as UBank.
• ME Bank was until recently a leader in sustainability, and a quote from ME Bank read: “ME does not have any investments in the mining industry, including the coal and gas export industries, and does not intend to invest in these industries in future.” ME Bank was bought out and acquired by Bank of Queensland whom do invest in fossil fuels.  
• RAMS is owned by Westpac which invests in fossil fuels.

Although some of these subsidiaries may not be investing in or have invested in fossil fuel industries themselves, their owners and parent companies may have a different position.

Practising Environmentally Safe Banking 

Banking practices have come a long way from years gone by. Nowadays, new features have been added to ensure that individuals get not only a competitive service, but that lender values align with their consumers’ worldviews. One benefit from recent years has been the introduction and implementation of digital and online offerings, providing less wastage, and a smaller carbon footprint.

Some examples of such are that online banking reduces paper waste via digital receipts and transactions. In turn, this leads to lower usage of paper and indirectly deforestation.

Second, online banking curbs the effects that carbon dioxide, a part of fossil fuels, has on the environment. For instance, you can request that your savings accounts statements be emailed to you, your entire relationship with your bank being digital. Without this online banking system, you’d have to drive to or visit the bank, often increasing your carbon footprint.

Although these might seem minor, they’re convenient as well. It is much easier to find your statements online than it is to hunt down a paper statement in a pile of unread mail.

How To Tell If Your Bank Is Ethical

Now more than ever, people seek out socially responsible investment options. Many people prefer ethical companies and banking services. Being a member of a responsible investment association is one example that lenders can take to demonstrate their commitment to sustainability.  

Practising ethical banking is relatively easy and over time will make us more socially conscious consumers. Before investing or taking out a loan, you can do your own ethical company assessment. 

Consider your option if the bank funds fossil fuels and has personal objectives that align with your values.

Whilst we’ve spoken in depth about fossil fuels, you might have your own priorities. Are you more concerned about animal rights, human rights, tobacco, firearms? Researching a little prior to setting up your banking partner will help you understand the kind of banks or credit unions you’re looking for.

You can find more on ethical banking from the following sources. 

• Ethisphere
• Market Forces
• Shop Ethical
• BankTrack

Good environmentally friendly banks do not simply avoid investment in factors that may be seen as unsustainable, but they also reinvest their monies responsibly.

Final Words

It’s never too late to start considering your footprint when it comes to your banking options, especially if you’re concerned about the environment. Ensure that your retail deposits are made with institutions that meet your own goals and align with your values. If you do decide to make a change and your bank asks you why you’re leaving, you can explain your reasoning.

Finally, you can decide if you want to invest in renewable energy or climate-friendly activities.

As an ethics conscious Australian mortgage broker in Sydney, finding you the best home loan will always be the foremost priority. So feel free to communicate your needs regarding socially responsible investments and loans and we’ll make sure to find you the best fit!

Australia’s Property Market

The past 5 years in the Australian property market has seen a huge growth in median property prices, especially in Australia’s capital cities – Sydney and Australia. But recent trends show a trend of steadily growing rate rather than rapid growth.

• Median house prices are predicted to fall about 7% in mid 2019. (Domain.com.au)
• Unit prices will continue to grow by 2-3% over 2019 and 2020. (Domain.com.au)
• Sydney and Melbourne property prices are predicted to stabilise in 2019. (Domain.com.au).
• Property in Sydney is expected to rise only 3% within the next 3 years. (Propertyupdate.com.au)
• Over the past 25 years there have been strong housing market conditions, boosting median house values by 412%. (Aussie.com.au)
• On average, 52% of Australians of their wealth in housing. (Deloitte).
• The median property price across state capitals dropped 5% in 2018. (Corelogic.com.au)

Current Home Loan Trends

Playing a significant role in the Australian economy, changes in the property market continue to impact Australians and the manner in which home loans are conducted.

• NSW has the highest average loan of any state, at $456,000. (Finder.com.au)
• Valued at $7.5 trillion, housing plays a vital role in the Australian economy. (Deloitte)
• The average loan size in Australia during 2018 was $379,300. (Finder.com.au)
• According to Digital Finance Analytics, 40% of home loans were rejected in December 2018. (Digital Finance Analytics).
• The highest rate of mortgage rejection was for refinance applications at 48%. (Digital Finance Analytics).
• The number of refinancing commitments for owner occupied housing (trend) fell 0.1% in November 2018. (ABS).
• Authorised deposit-taking institutions rejected over 40% of home loan applications, compared to the 20% rejection rate by non-banks. (Digital Finance Analytics).

Home Loan Predictions for 2019

Stability in the Australian housing market is predicted for 2019. However, due to stricter mortgage lending standards in 2019, home loans will continue to be difficult to obtain.

• The number of homes for sale is expected to rise in 2019. (Nerd Wallet)
• Mortgage rates are expected to rise again in 2019, but at a slower rate than in 2018. (Nerd Wallet).
• A 0.4% rise in the 30-year fixed mortgage rate is expected. (National Association of Realtors).
• Home approval rates could drop to as low as 20% in 2019 due to tightening of credit conditions. (David Plank, ANZ Senior Economist).
• Due to home loan sizes falling, this is an indication of falling house prices. (David Gradwell, ANZ).

The impact of Home Loans

Home Loans require a significant investment and commitment and can have serious impacts on your finances. As the housing market continues to change and grow, there is a greater need to understand the impact of taking out a home loans.

• 61% of individuals renegotiate their home loans at least once every 5 years. (KPMG International).
• In 2016, the average household debt was 4 times what it was 27 years ago. (KPMG International).
• The ABS saw dwelling approvals decline by 9.4% from August 2018. (ABS).
• The value of home loans in Australia continued to decline in September as credit growth slows. (Business Insider)
• Loans to owner-occupiers have fallen by 11.1%. (Business Insider)

Choosing the Right Home Loan / The Costs of a Poor Home Loan

The costs of choosing the wrong home loan can be detrimental. Factors that need to be considered when choosing a home loan include, economic factors, personal financial circumstances and future plans.

• Tighter lending conditions have been a major contributor to Australian property prices. (Domain).
• Between October and November 2018, the average loan size for first time home buyers fell by $2,400. (ABS).
• Population growth, low employment and low interest rates will underpin Australian property price growth in the medium term. (Domain).
• The total value of dwelling commitments excluding alterations and additions fell 1.1% in November 2018. (ABS).
• In 2018, the average home loan was $345,800, dropping compared to 2017 where the average home loan was $374,050. (Finder).

How much does a new kitchen cost in Australia?

Almost as how long a piece of string is, it’s difficult to say without knowing the finishes, the appliances, the building materials, the size of the kitchen. A brand new kitchen can be quite costly, with the other option being to renovate or redo.

How much does it cost to redo a kitchen?

Of course, the cost of any renovation will be entirely dependent on the size of the project, the materials used and the services required. Obviously, no one kitchen will cost the same, in the same way no one kitchen is the same. While choosing lower quality materials, or being select with exactly what you renovate can bring your costs down, it’s important to note that your geographic location can also affect the cost of your renovation. Within major cities, such as Sydney and Melbourne, it can be assumed a renovation can cost more than in other areas, with the average renovation price being somewhere above $20,000. Outside of these areas, the average cost of renovating kitchen will cost around $17,000.

Cost to renovate kitchen Australia:

Of course, there’s a lot of room for variation and prices can change dramatically. For example, the average kitchen renovation cost Australia can cost:

• Apartment sized kitchen or small updates: $5,000 – $10,000
• Budget Kitchens: $10,000 – $25,000
• Standard or mid-range Kitchens: $20,000 – $45,000
• Luxury or High-end Kitchens: $45,000 – $100,000.

Of course, there’s no real limit to what you could spend on a kitchen, it simply depends on how creative you want to get. It’s best to speak to a professional and get a customised quote which incorporates everything from design fees to material and labour costs.

Renovation and material options

As we have mentioned, your price point will be determined by the materials you use and exactly what you renovate. Here’s the different areas that a kitchen renovation will involve, along with popular material choices and their respective costs:

The design

The design is one of the most important, but often overlooked aspects of a kitchen renovation. The layout of your kitchen can make or break the ease of workflow and productivity. A poorly designed kitchen can be frustrating to work in and if you’re spending a large sum of money you want to be sure you will enjoy being in the new kitchen. A professional kitchen designer can ensure a sensible layout while providing you with ample storage and a stylistic look. So, how much do kitchen designers charge? If you’re looking at redesigning the entire layout of your kitchen you’ll need to factor in designer’s fees, which are normally around 10% of the overall cost. The average price point for designer’s fees is $2,500.

Cabinetry

The cabinets of every kitchen should be sturdy, but the materials they’re made from will determine how much you spend. Cabinetry materials are usually wood, wood veneers or composite woods like chipboard, though aluminium and polyethylene are increasingly popular options. Melamine drawers and doors are a great budget option, whereas solid timber is more expensive but can give a better aesthetic finish. In most kitchens, the cabinets will take up a large portion of the space and incidentally, will be a big chunk of your budget. To replace all cabinetry, you can expect costs to be anywhere from $4,000 to $10,000.

Bench tops

The next most significant part of your kitchen renovation will likely be the bench tops. Again, depending on the materials used on these surfaces, there can be a large sway in pricing. Common kitchen benchtop materials include marble, stone, metal and composite woods – all of which have different price points. More basic materials, such as laminate benchtops can be less than $3,000, whereas solid timber or gloss polyurethane can be much more expensive. Even more expensive is marble or stone benchtops which can easily go above the $10,000 mark, before installation costs. The kitchen benchtop replacement cost can be significant.

Flooring

When it comes to kitchen renovations, the flooring can be easy to forget, however it can be an important aspect. Your kitchen needs a durable and easy-to- clean floor surface. There’s a great variety of flooring options and you can choose between different types and styles of tiles, vinyl, wood and linoleum.

A tiled floor is generally more expensive due to the material itself but also the installation process. Tiles will cost around $2,000 depending on the kitchen size. High end kitchens often use wood flooring, but this can increase the costs to around $4,000. The more affordable options are vinyl and linoleum which are normally only $300 – $400.

Lighting

Lighting is an important part of your kitchen as you want certain areas to be well lit for food preparation. Although not the most expensive part of a renovation, lighting can still add up. Normally installation costs for lighting sit around $300 and adding in the average price of downlight and pendant lighting your overall cost of lighting in your new kitchen will sit around $900 to $1500.

Appliances

Costs of appliances vary greatly depending on location and the brand name, though the typically cost of labour when installing a new oven or dishwasher is $300. Factoring in the cost of the appliances themselves and you can expect the overall fit out of your kitchen to sit at roughly $5,000. Of course, with more high-end appliances the price can quickly double or triple.

In the end, it’s important to do your research, factoring in your own preferences, needs and wants along with the size of your kitchen. If you’re working with a relatively small budget, there’s a lot of compromises you can make to bring the price down. It’s important to remember, however, that you should not compromise on the quality of construction. Cabinets that are well-made, with high quality hinges and drawer runners can make a world of difference. Consider this before you put majority of your budget into an expensive marble bench top.

After a renovation, a well-designed kitchen, with thoughtful planning, both in terms of layout and budgeting can make a huge improvement on your day to day life, but also on the value of your home. Paying for the renovation with a loan or by making a budget and putting aside savings can do wonders.

What does a conveyancer do?

The legal process of buying and selling a house is complicated and an experienced conveyancer is well vested in navigating the legalities involved. A conveyancer is a person who will assist in the process of transferring the ownership of the house from the seller to the buyer. Without thorough knowledge of what’s involved, problems can arise which can potentially be damaging to the deal.  Therefore, it’s best to think of a conveyancer as an investment.

Before the sale of your home is finalised, there’s a wide array of documents that must be in order. While not legally required, employing a conveyancer ensures that things like the home’s approvals, certificates and building permits are legally approved and acquired to hand over to your new buyer during the transfer of ownership process.

A conveyancer will also undertake an in-depth background search of your property, and ensure that there is no illegal construction, as well as whether there are any regulatory issues.

It’s worth noting that there are a lot of options when it comes to selecting a conveyancer. It’s advisable to ensure that your conveyancer is part of the Australian Institute of Conveyancers (AIC). As with any profession, experience is valuable so look for conveyancers with at least 2 years of experience, along with the proper certificates.

Why Hire a Conveyancer?

If a conveyancer isn’t a legal requirement of selling a home, then what’s the point of spending money on one?

As we have mentioned, conveyancers are experienced in dealing with the legalities that surround selling a home. Conveyancers can streamline this process, organising all the documentation and ensuring that your house meets a range of regulations and building codes. If these things aren’t completed professionally, costs and problems can occur down the line.

A conveyancer’s services make it easier for the buyer to be sure that they are buying a safe, problem-free house. This also makes it easier for the bank to make assumptions on the state of the property, which in turn makes the property more attractive to potential buyers.

Conveyancers are well practiced in communicating the entire process to their clients. A good conveyancer will appreciate that you may not understand the legal terms or reasons for such regulations and will be able to explain such things to you. This will give you, as a seller or buyer, some piece of mind as you can query them on any concerns you may have with the process.

The cost breakdown

For first time house sellers or buyers, the entire experience can be overwhelming and it can be hard to understand the costs of someone such as a conveyancer.

A conveyancer can work in a number of fields and can either work for themselves, in a small business or a major corporation or solicitors’ office. How they operate will impact on what they charge and potentially the quality and experience of their services. For this reason, it’s important to do research and find out which level of professionalism, cost and experience will work best for you, and your needs.

There are a number of tasks conveyancers will do within their normal responsibilities. This will generally be a comprehensive list of all the obligations fulfilled by the owner that are legally required prior to sale.

There are DIY conveyancing kits, which are most likely always going to be the cheapest option ($80 – $150), but again, conveyancing is a complicated process and mistakes will dramatically impact on the settlement.

Conveyancing fees, like all professional services, will vary depending on the amount and type of services required. Typically, conveyancing fees can range from $500 to around $2,500.

Pricing for conveyancing services is normally charged in one of two ways, either as a fixed fee, or a sliding rate based on the property’s sale price.

There are disbursements costs, which are essentially costs for extra things that the conveyancer needed to pay for on your behalf.

A few of these disbursement costs include:

• Title searches – $20 up to $100
• Council building certificates – typically $250
• EPA Certificates – $20 to $25
• Drainage layouts – $25
• Postage and other admin costs – $20 to $60
• Land tax clearances – $25
• Roads and traffic authority – $20 to $30
• Land council compliance – from $150 to more than $450

The outcome and how to find a conveyancer

Similar to almost any job or service, not everyone’s skill and experiences are equal. A conveyancer is a significant part of one of the most significant transactions in your life, so it’s important that you make the right choice.

When you look to hire a conveyancer, make sure to ask a few questions and make sure that they are skilled enough for your task, and are within your price range.

When you get a quote, it’s important that there’s a clear breakdown of costs and you can be confident in how much you will be paying. The AIC suggests asking a few different conveyancers the following questions:

• Are you a member of the Australian Institute of Conveyancers?
• What’s the maximum I can expect to pay in fees and charges?
• What are your fees and what services are included in those fees?
• What will any additional services cost?
• What government fees and charges will I need to pay?
• How long will settlement take?
• How will you keep me up to date with what’s happening?

This will help you be sure in their abilities. It’s also important that you divulge your specific situation in terms of time frames, financial limits or any other specific information you feel may affect the transaction.

Employing a professional conveyancer will ensure that, as either a buyer or seller, all the legal requirements will be properly handled during the sale of a home. This will not only help avoid issues, but a conveyancer’s experience will help streamline the process and give you peace of mind during one of the most significant transactions in your life.

Blacktown

Around 35 km west of the CBD you will find one the largest and most multicultural suburbs in Sydney – Blacktown. Thanks to the growth of Parramatta, Blacktown’s appeal is fast increasing. It boasts great access to public transport with a well-serviced train station and a major bus interchange. The transit time into the CBD is around 45 minutes. For families, there is a large number of both private and public schools as well as plenty of parklands and public spaces around the suburb. In Western Sydney, it is considered to be one of the best areas for shopping, eating out and mobile reception. For food-lovers, there is an abundance of different cuisines and ethnic food stalls thanks to the diversity of the suburb. You can feel free to indulge in all the food you want because there are also a wide variety of gyms and health amenities located within the suburb. Around half of the population are families and the median age is 33. In terms of prices, the median unit price sits around roughly $500,000 and the median house price around $713,000.

Harris Park

Parramatta’s neighbour, Harris Park’s negative reputation is a thing of the past. It is now considered one of the most liveable suburbs in the West and is an more affordable option for those looking to buy property. In terms of public transport, it’s one of the more accessible suburbs in Sydney, with its own train station, as well as Parramatta train station nearby, and plenty of bus links. For culture, there is are theatres, libraries and cinemas close to and around the suburb. It is home to a significant amount of heritage-listed real estate as well as shops, cafes and restaurants. The median unit price is $495,00.

Hornsby

A leafy residential area, surrounded by Regional and National parks, Hornsby is a great area for families. It is 25km north of the CBD, about a 35-minute drive, but there is also a railway station providing frequent trains to not only the city but different areas of Sydney, particularly the North Shore and Northern Suburbs. The access to education is excellent with a number of primary and high schools, public and private, co-ed and single-sex, in Hornsby and neighbouring areas. Hornsby Girls High School is considered to be one of the best selective schools in Sydney, ranking 7th out of NSW schools in terms of HSC results last year. The suburb is home to Westfield Hornsby, that offers a wide range of major retailers as well as many dining options. The suburb is considered safe and relatively quiet, with the median house price standing around $1.1 million.

Lalor Park

Right near Blacktown, you’ll find the small but flourishing suburb of Lalor Park. Like Blacktown, it has benefited from the growth of Parramatta. While it does not have the same public transport infrastructure as the neighbouring Blacktown it is close to the Seven Hills train station and there are a number of buses servicing the area. However, the best option for transport is usually by car as it is only a short 30-minute drive into the CBD. As the western suburbs go, it ranks well for liveability with good access to shopping centres, parks and schools (public, Catholic and primary). It is known for being quiet, friendly and leafy with a sense of community amongst neighbours. While the eating out and cultural options within the suburb are not extensive, it is only a short drive to other town centres. Currently, the median house price is $645,000.

Liverpool

Liverpool is one of the biggest centres of Sydney’s south-west and, like Parramatta, it is experiencing a period of growth and transition with the population expected to double in the Greater Liverpool Region by 2036. With the opening of the Badgerys Creek airport nearby, as well multiple development plans and the redevelopment of Liverpool Hospital, the economy is expected to grow further with jobs on the rise. This growth has meant more infrastructure and amenities in the suburb as well as more concerted efforts to improve transport in the region. There is a Westfield shopping centre with many dining and entertainment options, plenty of parks, a major train station and multiple schools nearby. The area is known for being multicultural and significantly more affordable than the rest of Sydney. The median price for a 2-bed unit is $440,000.

Macquarie Park

Surrounded by forest and bushland but with greatly improved train and road links to the CBD, Macquarie Park is fast becoming a suburb to look out for. A 20-minute drive into the CBD, it has great proximity to employment, being close to both a university, a business park and a major shopping centre. There is also a range of cafes and restaurants in the area, as well as good telecommunications coverage. It’s the perfect option if you want a quiet, leafy suburb combined with the positive aspects of city living. Unlike the western suburbs, in Macquarie Park you are less than 3km from the nearest beach which means you can enjoy some of the perks of coastal living when you want to! The median unit price is $778,000.

Marrickville

Move over Newtown, there is a new inner-west suburb that’s turning into a hotspot – Marrickville. Just 7km out of the CBD Marrickville is becoming an increasingly desirable location for property, particularly for millennials who are looking for the buzz and trendiness of Newtown without the huge price tag. Access to transport is excellent in this suburb, making it easy for residents to get to not only the CBD but other inner-city areas. There are plenty of public buses and multiple nearby train stations that service the area. Bustling and lively, Marrickville’s multiculturalism is best articulated through the many restaurants and cafes in the area, serving up every type of cuisine imaginable. There is no shortage of places to grab a coffee, have a wine or order takeaway from. There are a number of schools in the area however, statistics show that the area is mostly populated by young professionals. One thing to consider in regards to property in Marrickville is that it lies under the flight path so noise levels can be an issue for some residents. Currently, the median unit and house prices are around $770,000 and $1.4million respectively.

Menai

In the city’s south, around 35 minutes from the CBD, you’ll find another sought-after, family-friendly suburb in Menai. It is close bushland and parkland, with a lot of walking and hiking tracks close to the area, making it great for nature lovers and those wanting to escape that city living feel without moving too far away. As well as being relatively close to the city, it is only a 30-minute drive from the Royal National Park and 20 minutes from the beach. There is much more open space here than most suburbs in Sydney as well as plenty of community recreational facilities and a bustling shopping centre. There is good access to both primary and high schools as well as childcare facilities for those with young children. It is considered to be a safe, clean and vibrant southern suburb. A 3-bedroom house in this area will cost an average of $900,000.

Parramatta

Frequently being named as one of Sydney’s most livable areas, Parramatta continues to catch the eyes of Sydney’s property hunters. Technically Sydney’s geographical centre and straddling the Parramatta River, this area is fast emerging as a second CBD. Parramatta has experienced a staggering amount of growth over recent years and money and resources are still being put towards its development. It is only a 40 minute trip from Parramatta into the centre of Sydney and Parramatta railway station is a major transport interchange. However, it is also accessible by buses and the Rivercat. In fact, you can get a ferry right into the heart of the CBD and enjoy scenic views on the way. With plans to develop a light rail line and widen the M4, transport options will only improve. Once considered not much more than an urban industrial suburb, Parramatta has transformed into a vibrant, lively city with a growing economy, plenty of job opportunities, access to education and universities and great eating out, entertainment and shopping options. There is plenty of culture, with free concerts in Parramatta Park and plans to move the Powerhouse Museum to the banks of the Parramatta River. The median price for a house is $1.05million.

Rockdale

Just a 20-minute drive from the CBD and close access to the beach, Rockdale is one of the most liveable suburbs in Sydney’s south. There is a hospital and educational facilities close by and Bicentennial Park provides great walking trails, the chance to see wildlife and a great picnic spot. You’ll find large heritage homes, well-cared for gardens and many wide streets in this suburb as well as a mix of multicultural cafes, restaurants and shops. There is excellent access to local schools and the area is well-serviced by buses running into the city centre and other suburbs. If you’re looking for a culturally diverse suburb which offers proximity to the beach and city, with a range of amenities, then Rockdale could be the place for you. Median unit prices stand at $677,000.

Waterloo

An inner-city suburb, Waterloo is less than a 15-minute drive from the CBD and is served by multiple metro bus routes as well as being close to many train stations. If you’re feeling up to it, you can actually walk into the centre of the city in around 30-40 minutes as well! Historically a working-class suburb, Waterloo has transformed over the last decade and undergone significant gentrification. This has seen the development of more recreation areas, parks, a civic centre, apartment developments and a library. There is an abundance of trendy cafes and restaurants in walking distance, as well as in the neighbouring suburbs of Alexandria, Redfern and Eveleigh. There are lots of schools around Waterloo as well as being close to many of the major universities in Sydney. 80% of the population of Waterloo are singles, rather than families, and is the ideal suburb for young professionals who want to live in an interesting and lively suburb close to the city. Here, a 2-bedroom unit will set you back around $930,000.

While Sydney remains ridiculously expensive in terms of housing affordability, the excessive cost of living close to the CBD has led to the growth and development of some of Sydney’s outer suburbs that may have once been overlooked by potential home buyers. By considering how livable a suburb is, that is if it has good access to transport and education, shops and dining options as well as proximity to nature or the beach,  rather than it’s distance from the CBD, you can find a range of suburbs that are great to live in. If any of those up-and-coming, vibrant areas sound like they would be the place for you then you can start your house-hunting journey off on the right foot by finding the perfect mortgage broker, who will help you to access a huge range of options and lenders when it comes to loans so that you can get the house of your dreams.

Stamp Duty Costs in NSW

What is stamp duty? Stamp duty in NSW?

You’ve done the hard work, saved up and are finally ready to buy your first home – congratulations! But before you can start planning your housewarming party, there’s one more thing to think about: stamp duty.

Stamp duty is a tax that’s payable on all property purchases in NSW, and it can add up to a sizable amount of money. The amount you’ll need to pay depends on the value of the property, but you can use a stamp duty calculator to get an estimate. Stamp duty is also known often as transfer duty.

So before you start shopping for your dream home, make sure you factor in stamp duty costs. That way there won’t be any nasty surprises when it comes time to sign on the dotted line.

In every state and territory in Australia, stamp duty is a tax that must be paid when you buy a property. The rates vary between states, and even within states depending on the value of the property being purchased. In New South Wales (NSW), transfer duty is based on the dutiable value of the property. The dutiable value is generally the purchase price, or market value of the property – whichever is greater.

Stamp duty in NSW is based on either the price you paid for the property or the market value of the property – whichever is greater. Rates vary between states and territories, which calculate stamp duty differently.

Who has to pay stamp duty?

Stamp duty is a tax that is levied on documents that are transferred from one person to another. The most common type of stamp duty is on the transfer of property, but stamp duty can also be levied on the transfer of shares, insurance policies, and even some contracts. In most cases, it is the responsibility of the buyer to pay stamp duty, although there are some exceptions. For example, in some cases stamp duty may be paid by the seller, or it may be split between the buyer and seller. Stamp duty is usually calculated as a percentage of the value of the property or contract being transferred, and it is typically payable within a few months of the transfer taking place.

NSW stamp duty rates are generally lower for residential properties than they are for non-residential properties. This is because the NSW government recognises that people need a place to live, and so they incentivise investment in housing. However, there are some situations where the reverse is true. For example, if you purchase a property that is zoned for commercial use, you will have to pay higher stamp duty rates. This is because the government wants to encourage investment in businesses, which create jobs and drive economic growth. Ultimately, whether you pay higher or lower rates of stamp duty will depend on the type of property you purchase and its intended use.

There are some exemptions and concessions available in NSW which can reduce the amount of stamp duty you pay. For example, first home buyers may be eligible for a concession.

When do you have to pay stamp duty?

Stamp duty in NSW is payable on the transfer of NSW real estate. The amount of duty payable depends on the type of property, the dutiable value of the property and the applicant’s eligibility for any concessions or exemptions. NSW stamp duty must be paid within 3 months of the date of transfer. If you do not pay stamp duty within this time, you will be liable for interest and penalties.

The amount to pay stamp duty will also depend on whether the property is residential or non-residential, as well as any exemptions or concessions that may apply. For example, first home buyers may be eligible for a concession.

How to pay stamp duty?

You can pay NSW stamp duty online, by cheque or by credit card. For more information, visit the NSW Office of State Revenue website.

What happens if you don’t pay stamp duty?

There can be a number of consequences if you don’t pay stamp duty. The most obvious one is that you may be prosecuted and fined. In addition, the property you purchase may be subject to a forced sale, and you may also be liable for any mortgage or loan repayments on the property. If you’re found to have knowingly avoided paying stamp duty, you may also be subject to a jail sentence. So it’s definitely not worth trying to avoid paying this important tax. Make sure you budget for it when purchasing a property, so you don’t find yourself in hot water down the line.

Stamp duty exemptions

Did you know that there are some instances where stamp duty isn’t payable? For example, if a property is transferred between parties as a result of a divorce, stamp duty exemption may apply. This is also the case for transfers between married couples or de-facto partners, provided the property being transferred is the family home (i.e. principal place of residence, not an investment property). So if you’re planning on transferring a property in these circumstances, be sure to check whether stamp duty exemption may apply – it could save you a lot of money!

First home buyers and stamp duty

For first home buyers, stamp duty payable can be a major financial obstacle. This tax is levied on the purchase of property, and can add thousands of dollars to the cost of a home. In some states, first home buyers are eligible for a stamp duty exemption, which can save them a significant amount of money. However, first home buyers should be aware that they may still be required to pay other taxes, such as capital gains tax, when they sell their property. As a result, it’s important to do your research and understand all of the costs associated with purchasing a home before you make an offer. During 2022 in New South Wales, for example, the stamp duty on a $500,000 property would be about $17,805.

Is stamp duty the same for established homes and vacant land?

This really depends on the state. In NSW, rates of stamp duty are the same for established homes, new homes, vacant land, as well as between owner occupied properties and investment properties. In Queensland however, this is not the case. Vacant land and investment properties attract a higher transfer duty or stamp duty.

Foreign residents and stamp duty

If you’re a foreign resident looking to purchase property in New South Wales (NSW), you’ll need to pay stamp duty as well. Foreign persons are required to pay a surcharge of 8 percent Stamp duty is a tax that’s levied on the purchase of property, and the rates can vary depending on your residency status. It’s important to get good advice as to whether you are required to pay the stamp duty surcharge as a foreign person, or whether you meet the criteria to avoid the stamp duty surcharge.

Calculating stamp duty in NSW

When you’re buying a property in NSW, stamp duty is one of the costs you’ll need to factor in. Fortunately, there’s a stamp duty calculator on the NSW Office of State Revenue website which makes it easy to work out how much stamp duty you’ll need to pay. Simply enter the purchase price of the property and the calculator will do the rest. The amount of stamp duty you’ll need to pay will depend on a number of factors, predominantly if you’re a first home buyer or not. Fortunately, the stamp duty calculator on the NSW Office of State Revenue website takes all of this into account, so you can be sure that you’re getting an accurate estimate of the stamp duty you’ll need to pay.

You can calculate the amount of stamp duty you will need to pay using our online NSW property stamp duty calculator – stamp duty calculator NSW. It’s important to note that our stamp duty calculator NSW does not look at commercial property and only focuses on residential property.

Are there any other fees payable when buying property?

In addition to the purchase price and stamp duty, there are a number of other fees that you will need to pay when buying property. These include legal fees, and other government charges. You will also need to pay for a building and pest inspection, as well as insurance. Depending on the type of property you are purchasing, there may also be other fees, such as strata fees or body corporate fees. It is important to factor these additional costs into your budget to ensure that you can afford the property you are interested in.

If you have any further questions about stamp duty in NSW or our stamp duty calculator, qualified Sydney mortgage brokers are here to help so make sure to contact us.