The slowing market and innovative lending products have made NSW a buyers market, especially for those that have not been able to buy because of skyrocketing prices.

Over the last two years, NSW has seen a gradual decline in house price, due to an overheated market and the controversial vendors tax. As prices have declined, and interest rates remain on hold, first home buyers are suddenly finding homes more affordable and negotiable.This has also allowedthose with established homes to upgrade.

This decline in house price combined with innovative loan products has made it very easy to get into a home today.

You don’t need a substantial deposit

Gone are the days where you needed at least 5 or 10% genuine savings. These days, lenders have responded to the slowing market, and are prepared to lend far more than say three years ago.

Some lenders will lend you the bulk of the purchase price if you can show themsavings equal to three percent of the purchase price. Other lenders do not even need this. Not only do they not require a substantial deposit, but they are prepared to lend you the mortgage insurance premiums as well, on top of the loan.

For a first home buyer, this is an absolute boon, as often the 7k grant is swallowed up by the mortgage insurance premiums, which can be as high as 13k.

How much would you need to get into a home today?

The assumptions I am making here is that you are a first home buyer, and that you qualify for a 97% loan (not 100% or no deposit loan, as these have added qualifying criteria), and the savings are regarded as genuine savings by the lender.

If you were to buy a home for 400k, all you need is 12k to get started. This combined with the first home owners grant, will leave you with some cash to spare after you have settled on your home.

So how does the first home owners grant work?

Essentially, you or your partner should never have owned a home in Australia before. This is the first and foremost criteria. Of course the grant is only open to permanent residents and citizens.

The second most important qualifier is that one of the purchasers MUST live in the house for six consecutive months within the first 12 months of purchase.

The grant waives all stamp duties (saving you up to 15k with most Sydney purchases), and also pays, either into an account or directly to the lender, to apply to the loan proceeds, at settlement, seven thousand dollars. This is the same for either a new or established home.

Some Handy Hints

1. Do the affordability test: If rates were to go up even by one percent, will you be able to meet the repayments without hardship?

2. Get rid of those high limit credit cards: the higher the limit, the less you can borrow for a home loan.

3. Talk to a broker who will help you through the whole process, not just get you a loan.