For first home buyers there is now double the incentive to purchase their first home. The Australian Government announced last week a first home buyer boost, which takes the grant from $7,000 to $14, 000 and even further to $21,000 for first home buyers who build a new home or purchase a newly constructed home. But, the extra boost is only available where the contract for the property is before June 30 2009.

 

This initiative follows the recent unexpected reduction of 1% in interest rate from the federal government which saw both the banks and non banks passing on up to 0.80% of the rate cut.

 

Both these changes are part of the government’s goal of stimulating the economy away from the recession occurring all over the world.

 

Leading non bank lender, Resi Mortgage says that this significant cut in interest rate will lift the average buying power by up to 10% and will encourage buyers who were previously priced out of the market to return. The interest rate cuts means that a borrower will be able to save at least $200 each month for an average home loan of $300,000 taken over 30 years.

With the increase in the grant, significant reduction in interest rates and stable or falling property prices, it is now more affordable for first home buyers to enter the market than it has been for a long time.

 

Despite the incentives, first home buyers are still more cautious and strategic than ever before. Affordability is still the number one concern and says that first home buyers are educated and taking the time to understand the impact a mortgage will have on their lifestyle. Caution is also necessary to ensure that the purchase price is not greater than the value of the property, 

 

Resi understands that education and information is significant, and provides assistance through the First Home Buyer’s Navigator brochure - a great grassroots information tool that guides first home buyers through the entire first home buying experience. Resi can also provide more information on the latest updates to the first home buyer’s grant.

 

For those with longer term savings goals toward buying their first home, the new Home Saver Account may help. This new account allows you to save money like any other saving account, except that government also contributes an additional 17% on contributions you make up to $5000 each financial year. However, you need to be making contributions of $1000 a year for 4 years before you can withdraw the amount and it must be used to purchase a first home.

Resi recommends all first home buyers to carry out an honest appraisal of their current financial landscape before making any commitments. If you are looking at purchasing your first home or would like more information about the grant, Home Saver Account or Resi’s First Home Buyer’s Navigator booklet, just fill in the form below.