Archive for the ‘First Home Buyer’ Category

For so long, the options that were available for First Home Buyers for finance has been restricted unless the borrower was able to come up with at least ten percent deposit or they were existing customers of a lender with an established credit history.

Neither of these was always an option but this meant that the options for finance were very narrow.

However, this is no longer quite the situation and over the last few days we have seen a number of lenders reduce the amount required as a deposit down to 5% or remove the need for a borrower to have been an existing client of the bank.

This is big news.

What’s more, we take this as a sign that the lenders are becoming increasingly confident not only in the economy and people’s ability to be able to meet their loan repayments in the future but also that housing prices will continue to rise in the medium to long term.

Will this see an increase in activity for First Home Buyers. You would think so as it will mean that more people have access to finance.

There have been some changes introduced on a State and Territory basis over the last few months and whilst most are not expected to impact on many people, there is both good and new bad news.

In the ACT, the First Home Owner Grant Act has been amended to allow an applicant to reapply for a further first home owner grant, if the original grant has been repaid including any penalties and interest. It has also been amended to introduce a first home owner grant cap of $750,000 for eligible transactions that commence on or after 1 January 2011. There have also been increases with the Home Buyer Concession Scheme but these changes are not restricted to First Home Buyers.

In NSW, the previous cap of $750,000 has now been increased to $835,000.

In SA, the cap for eligible transactions was reduced to $575,000 in the 2010 State Budget. At the same time, the amount available for first home buyers in South Australia who enter into a contract to purchase or build a New Home on or after 17 September 2010, or in the case of an owner builder commence construction of a New Home on or after 17 September 2010, may be entitled to the First Home Bonus Grant of up to $8000.

Further information is available from the relevant government website or by contacting us.

We are starting to see more and more lenders increasing the maximum amount that can be borrowed against the value of a property. This was one of the big changes that came about following the effects of the Global Financial Crisis and meant that borrowers had to find bigger deposits to use towards the purchase of a property.

This of course made it harder to people to buy their First Home but this is definitely changing with another lender now relaxing the rules and increasing the maximum LVR from 90% to 95%.

A flow on from this is that there may well be a flow on effect in the lower end of the market with first home buyers coming back into the market – a trend that we have seen first hand over the last few months.

One of the principles that we try to instill in people that are trying to buy their first home is the need to get a clear understanding of not only where they are currently but, if they are not in a position to buy their first home at the moment, that we try and make sure that they understand what they need to do to improve their position.

It was especially satisfying that we had a client settle the purchase of their first home last week after initially being declined back in June 2009.

Some people would have given up but this was not the case with this particular client and he took on the challenge of saving hard over the next 18 months and finally made it this time around.

It just proves what you can do if you commit to a goal and make it happen. Well done guys.

Be warned!

One of the conditions of the First Home Owners Grant in Queensland is that you must live in a property for at least six months after you buy it. Most people are aware of this but sometimes what is overlooked in that they must live in the property for twelve months to be eligible for the stamp duty exemption made available by the State Government.

If you don’t meet this condition, then the State Revenue Office will find about it and will come looking for part or all of the stamp duty that is now payable as the conditions of the exemption have not been met!