The Biking Broker Newsletter - 13th February 2009
Thinking of Buying Your First Home?
Whilst the First Home Owner’s Grant (FHOG) and the First Home Owner’s Boost (FHOB) have provided a significant step up to first home buyers, the effects of the global credit crunch have made getting money from lenders a little more difficult. I’m going to outline a few steps you can take in advance to increase your success of getting a loan.
1. Save a deposit
Obvious, but to show evidence of what the banks call “genuine savings” is the best way to increase your chances of success. Aim for 3-5% of the purchase price of your target price. Genuine savings do not include the FHOG, tax refunds or gifts, amongst other things. Genuine savings, along with your income, show your capacity to repay a loan.
2. Boost your perceived genuine savings
If you’re renting this expense will cease when your loan is settled but, in the meantime, pay your rent by direct debit so it shows on your bank statements. Pay any other regular payments such as car and contents insurance this way as well.
3. Reduce the available limit on your credit card
Credit cards attract high interest rates and adversely affect your capacity to repay a loan. Alternatively, pay your credit card off totally each month.
4. Develop a personal budget to achieve steps 1-3 above
If you can show a lender that you can achieve the above steps in any 3 month period you’re way ahead of the pack!
The good news is there are still a couple of lenders who don’t require genuine savings, and you can use your FHOG to meet deposit and expenses.
In this case, a FHOG eligible buyer can buy a $250,000 established house with no money up front (as long as they can repay the loan), or buy a $350,000 house and land package if they have the required builder’s deposit (usually 5% of construction cost).
Currently the First Home Owner’s Grant (FHOG) is $7,000 for purchase of an existing property or $14,000 for construction of a new property. The First Home Owner’s Boost (FHOB) is an additional $7,000 toward purchase or construction.
The FHOG is on-going, with no current end date.
The FHOB ceases 30 June 2009. To be eligible, you must enter into a purchase or construction contract before this date.
If you’re ready to buy your first home now, give me a call! It’s a good time to do so with depressed property prices, some good no application fee specials on at the moment, low interest rates and FHOG availability.