The First Time Home Owners Grant has provided a much needed boon to the Australian economy and has helped many Australians realize their dream of purchasing their own home But recent changes to the lending conditions may hurt potential first time home buyers making it more difficult to get that new home that they have been dreaming of.
New Lending Conditions Put A Damper On Home Ownership
New lending conditions are now requiring that first time home owners show evidence of regular savings over a period of time. Many lenders are also requiring a deposit of five per cent or more of the purchase price in addition to any federal and state given government grants. New homeowners will also be required to pay for any costs related to the purchase of the property.
Currently the First Home Owners Grant as provided by the government is $14,000 for homes that are already built and $21,000 for newly built homes. Under these new conditions potential first time home owners may once again find it difficult to afford to buy a new home. A first time home buyer who is looking at a property that costs $300,000 would be expected to pay between $15,000 to $30,000 plus additional fees when purchasing their home in addition to any Government grant money.
Preventative Measures To Prevent Economic Deterioration
The new conditions being placed on first time home buyers are a way to get back to the old days when the approval of property loans was dependent upon the new owner having cash up front. Many lending institutions would like to do away with 100 per cent financing loans altogether and have the 90 per cent loan the maximum amount able to be borrowed for a loan to value ratio.
Property Options Australia
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Hi Sean,
I think this is a difficult issue. On the one hand the first homeowners grant gives people a chance to get into their first home. On the other; if they don’t really have the money to be able to afford to genuinely purchase the home; they’re setting themselves up for disaster.
I think I heard somewhere just recently that it takes around four years to save the deposit for your first home. I thought that was okay as if you can manage your money for that long; you’ve got a good chance of keeping your home.
The West Australian goverment was also helping out first home buyers by reducing the stamp duty for them. The first homeowners grant may not cover your entry into the market but it sure helps alot.