Many Australians have been taking advantage of the Federal Government’s first home owners grant of $14,000 for a pre-existing home and $21,000 for a new construction home. The offer from the Federal Government is just too good for many Australians to pass up and has provided a way for many people to get into their first home more easily. But there could be trouble on the horizon. Research has shown that in the rush to take advantage of free Federal money one in five new home owners has gotten in over their head and may have trouble repaying their loans.
Mortgage Statistics
According to recent research by market analyst Datamonitor 30% of people who purchased a home in the last year by taking advantage of the first home owners grant are experiencing mortgage stress and 21% of new home owners stated that they expect to have difficulty repaying their mortgages over the course of the next five years. In addition over one fourth of the new home owners are spending more than 30% of their income on mortgage repayment and servicing loans.
Buyers Desperate To Cash In
Many first time buyers are feeling the pressure of the approaching June 30th deadline for the grant. This can lead to a sense of desperation and anxiety over trying to get in under the wire which is causing many first time home buyers to really feel the stress of the situation. The limited number of homes that are available and the rising cost of rent only fuel the desperation of house seekers. This situation has led many first time home buyers to purchase a property that is over their budget and over their head in expenses.
Property Options Australia
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Hi Sean,
This is one of my fears with the first homeowners grant. Sometimes, I think it’s too easy to get a loan. In some ways I think if a major bank won’t give you a loan then perhaps you shouldn’t have one.
I know that’s a shortsighted view and there are a lot of great places to get a loan that doesn’t include a bank. It’s just that some of these figures are a little scary. I really feel for these new homeowners who are in over their heads.
Perhaps people taking advantage of the first home owners grant are buying out of their price range. Instead of grabbing a modest 2 or 3×1 they may be looking to far upmarket to ‘keep up apperances’. Personally I think the Goverment grant is brilliant and really helps out the battlers in our society.