The cost of stamp duty has in the past, been a barrier to property ownership for many first home buyers. First Home Buyer Choice is an initiative by the NSW government to allow first home buyers to choose if they want to pay an annual property tax rather than an up front lump sum stamp duty.
How will First Home Buyer Choice impact borrowing capacity?
If you choose to pay the annual property tax, the annual fee is added to your ongoing living expenses. Living expenses play an important role in determining your borrowing power – the higher the expenses, the less you will be able to borrow.
Its also important to remember that while less deposit is needed to purchase your first home, this doesn’t mean you can borrow more because there is no upfront stamp duty cost to pay. The smaller your deposit, the less you can borrow.
Find out more about First Home Buyer Choice in the video below. You can also click HERE to check out the First Home Buyer Choice calculator to help you decide if the annual property tax is the right option for you.
Introduction to First Home Buyer Choice