A Good Time For Home Buyers with Bridging Finance
‘There has never been a better time to buy a new home in NSW’ says Maria Bekiaris of Money magazine. The NSW budget announced in July the introduction of the NSW Home Builders’ Bonus, giving all home buyers and investors (including both first home buyers and existing home buyers) a huge discount (and in some cases, a complete exemption) on stamp duty.
However, with all pros there must be a con and the con here is the expiration date on the bonus, set to stop running in the short term of one and half years. With the rising cost of property value, experts encourage buyers and investors to buy now while prices have yet to sky rocket and the bonus is still in place. The risk of waiting too long is estimated to be a risk not worth taking. Buyers who have insufficient funds are advised to take out a short term bridging finance or bridging loan and invest now, while they can.
The bonus is estimated to save buyers $5,623 to $22,490 on stamp duty; the saving expected to make repayments on bridging finances and bridging loans easier. Those who are looking for a new home are encourage to put their existing home on the market and invest in a property of higher value. While their initial property is selling, buyers can take out residential bridging in order to pay for their new home. After their property has been sold, the proceeds can go back into repaying the bridging finance.
The bonus works in two main methods. Investors who purchase a home worth up to $600,000 before the property undergoes construction, will incur no stamp duty payment. This bonus can save buyers up to $22,490. The second method applies to newly constructed homes worth up to $600,000. Buyers who purchase homes that are under construction or after its completion will receive a 25% stamp duty cut. This bonus can save buyers up to $5,623.
Investors are warned, however, to choose wisely when taking out a bridging finance or bridging loan as the wrong loan will have buyers losing the money that they saved on their stamp duty. Buyers are advised to consider how much their present property can be sold for, rather than consider how much their property is worth before deciding on the amount that they would like to take out on the bridging finance. This point is strongly emphasized as, with the market as it is, a property might be sold at a lower price than the property is worth.
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