In Australia, many first-home buyers find themselves priced out of the market in their desired areas. As a result, buying an investment property as a first purchase has become a popular option. This allows buyers to widen their options and find a solid investment property at an affordable price. However, before embarking on this journey, it’s crucial to understand the eligibility criteria and considerations involved. In this blog post, we will explore whether a first home buyer can buy an investment property in Australia and delve into the eligibility criteria and maximum loan-to-value ratio for such loans.
Eligibility Criteria for First-Time Homebuyers to Buy an Investment Property in Australia:
The eligibility criteria for first-time homebuyers looking to purchase an investment property in Australia may vary depending on the state or territory. However, some general requirements and considerations include:
First Home Owner Grant (New Homes) Scheme: To qualify for this scheme, you must buy or build your first home, a new property that nobody else has lived in before. The property’s value must not exceed a maximum threshold, usually around $750,000. Additionally, you must move into the home within 12 months, live there continuously for at least six months, and be at least 18 years old while also being an Australian citizen or a permanent resident of Australia.
Deposit: Acquiring an investment loan usually requires a substantial deposit. Lenders may expect you to demonstrate a strong income, stable employment, and financial stability to secure an 80% investment loan. It is possible to use less as deposit but you may be subject to lender’s mortgage insurance. It’s important to note that the higher/lower the deposit, the better/worse the loan terms and interest rates you may qualify for.
First-home Owner Grants and Incentives: It’s crucial to understand that first-home buyer grants and incentives are typically not available for investors. This means that you won’t be able to claim a first-home owner grant in most cases or be eligible for the federal government’s loan deposit schemes. Stamp duty exemptions and concessions may also be excluded. If you have previously bought an investment property, you might not be eligible for these grants or concessions even if you later purchase a home to live in, as they are usually reserved for individuals who have never owned residential property before.
Other Considerations: Buying an investment property as a first purchase requires careful consideration. It’s advisable to consult with a buyer’s agent who can guide you through the intricacies of investing in real estate. Additionally, purchasing an investment property can provide the opportunity to continue living in desired areas and enjoy associated lifestyles while building a property portfolio.
