Wednesday, May 6, 2009

First Home Owners Grant - about to reduce

We all know the recent drop in interest rates has made home loans that little bit more affordable. With the spiralling price of housing finally easing somewhat, First Home Buyers are presented with an unprecedented opportunity to enter the property market. However, for most part, the days of access to the property market with little or no cash may be gone.

Two reasons for this. The first is that the Federal Government has indicated that the extended First Home Owners Grant (FHOG) will reduce back to $14,000 and $7,000 respectively for new and established homes by June 30 of this year (down from $21,000 and $14,000 respectively). In the current economic environment of government fiscal stimulus, we cannot rule out an extention to the current FHOG but just in case, if you are a first home buyer, consider looking now as you may regret it come June 30.

The other reason is the withdrawl from the market of the 100 per cent home loan. Of the three remaining lenders offering this type of loan, all have now withdrawn it. Prudently, this means buyers will now have to save a 5 per cent deposit and have the FHOG cover the fees and charges including mortgage insurance.

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