Should you buy before 1 July 2014?
Tuesday, 20 May 2014
The end of the $5,000 First Home Owner Grant (FHOG) for established homes on 30 June 2014 marks the first time in years that there hasn’t been assistance available for purchasing existing homes.
The FHOG scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. Since then, states where the first home owner grants for established properties have been cut (for example, New South Wales and Queensland) have experienced a significant drop in first home buyers entering the market.
Government assistance and flexible lending policies
Nick Bendel’s recent article in The Adviser explored other ways government assistance and flexible lending policies could help, such as an increase in minimum wage, a reduction in stamp duty and stimulating competition among Lenders Mortgage Insurance (LMI) providers to lower insurance prices.
HomeStart aims to assist this group as they face the biggest challenges with affordability and upfront costs. In 2012-13, 55% of our total loans were to first home buyers and based on previous experience when grants have ended, we expect to see an increase this financial year when the grant ends on 30 June.
To address some of the ongoing issues facing first home buyers, HomeStart has developed a number of unique home loan products, such as:
- Deposits from 3% for Graduate and Low Deposit Loans
- Increased borrowing capacity of up to 30% via the Breakthrough Loan, a shared appreciation product.
- Reduced upfront costs with our Loan Provision Charge, which is generally much lower than Lenders Mortgage Insurance. HomeStart also accepts grants towards deposit requirements.
- Manageable repayments set at the start of a loan and normally adjusted once a year in line with inflation. This means loan instalments are not typically linked to interest rate changes.
- Subsidised loans like the Advantage Loan, EquityStart Loan and Wyatt Loan to help specific groups borrow more to achieve their home ownership aspirations.
Share your thoughts
So what do you think of the end of the grant for established homes? Are you thinking of buying your first home before 1 July? And what else do you think can be done to help first home buyers get started sooner?