08 Oct 2019

Why it’s a good time to be a first home buyer

For a number of years, first home buyers have come out last, beaten by experienced investors and cashed-up downsizers. But, with changed market conditions, generous stamp duty concessions and the new government first home loan deposit scheme, it’s time for first home buyers to shine… or rather, ‘to buy’! 

Let’s take a look at why it’s a good time to be a first home buyer.

Favourable property market conditions

Favourable market conditions make it an excellent time to be a first home buyer. Primarily triggered by tighter lending standards, the property market has slowed, and house prices have dropped. Anyone looking to sell property will not be happy about the recent property market downturn. But it spells good news for first home buyers, especially those who have been working hard to save a deposit. Lower house prices are giving first home buyers a chance to finally get their foot in the door. 

While tighter lending standards affect first home buyers too, ABS Housing Finance figures show that other buyers are being hit much harder. Recently, in November 2018, first home buyers share of owner-occupier loans was the highest since October 2012. Statistics showed that first home buyers made up 18.3% of owner-occupier loans, an increase of 0.2% from the previous month, while the value of investor commitments dropped 4.5% month-on-month. 

First Home Owners Grant

Unlike other groups of buyers, first home buyers have a helping hand from the government through the First Home Owner Grant (FHOG). This grant varies across states and territories but is designed to help first home buyers into the property market through a combination of grants, stamp duty concessions and tax breaks. 

For example, since July 2017 first home buyers in New South Wales may be eligible to receive a $10,000 grant when building or purchasing a new home. The government will also waive stamp duty altogether for home purchases up to $650,000 and reduce stamp duty on homes up to $800,000. Insurance duty (a government tax) is also waived on lender’s mortgage insurance. 

 In Victoria and Queensland, first home buyers may be eligible to receive a grant of up to $20,000. While in the Northern Territory first home buyers may be eligible to receive a $26,000 grant along with a home renovation grant of up to $10,000 and a household goods grant of up to $2,000.

First Home Loan Deposit Scheme 

Things are only getting better for first home buyers with the introduction of the First Home Loan Deposit Scheme. The scheme will start on 1 January 2020 and allows first home buyers to purchase their first property with a deposit of just 5% without the need for lenders mortgage insurance. Under the scheme, the government will guarantee the difference between the lower deposit and the standard 20% requirement. This government guarantee would remain in place for the life of the loan or until the homeowner refinances.

Allowing first home buyers to get into the market with a deposit of as little as 5% can dramatically reduce the time taken to save for a deposit and enables first home buyers to start building equity much sooner. Eliminating the need for lenders mortgage insurance will also lead to big savings for first home buyers who could save thousands.   

Are you a first home buyer? 

If you’re lucky enough to be a first home buyer at this opportune time, talk to us about how you can take advantage of these favourable conditions. Getting into the property market may be much easier, and sooner than you think! 

Mortgage House 

 At Mortgage House, we’re no strangers to the first homeowner’s journey. If you’re thinking of applying for your first home loan, you can Apply Online today to get started!

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