From Friday 1 January 2010, eligibility for the existing FHOGS (First Home Owner Grant Scheme) benefit of $7,000 will be restricted as follows:
• NSW – purchase property value capped at $750,000.
• WA – purchase property value capped at $750,000 for post codes south of the 26th parallel (i.e. from Kalbarri 6536) and $1,000,000 for post codes north of the 26th parallel (i.e. from Denham 6537).
• VIC – purchase property value capped at $750,000 (a farm purchased as a principle residence is excluded from the cap).
• QLD – purchase property value capped at $1,000,000.
• NT – purchase property value capped at $750,000 (First Home Owner Transfer Stamp Duty Concession eligibility will also be capped at $750,000 for established dwellings and $385,000 for vacant land).
• SA/TAS/ACT – no purchase property value cap applies.

Most first time home buyers should not be affected, and the extension to 30th June 2010 is a welcome sign for buyers seeking a home.

The Federal Government announced this month that each state government could cap the first home buyer grant – set to fall to $7000 from January 1.

In NSW, that upper limit will be $750,000, while halving of stamp duty on any property up to $600,000 will also be wound back at the end of the year.

This could affect first home buyers looking to purchase close to the city, as prices in this zone are often above the new upper threshold of $750,000.

However, first home buyers should not discount middle circle suburbs where it is still possible to purchase under $600,000.

Some recent capital gains in these suburbs have also outperformed inner suburbs (particularly those in the Northwest and West).

Remember, always consult a trusted property professional before investing.

In the last 2 weeks, the banks have toughened up and now want to see borrowers capable of repaying a 95% LVR Home Loan.

Banks now require “5% Genuine Savings”, to be proven by showing 3 months bank savings account statements. All large deposits have to be explained, and Mum & Dad throwing $10,000 into the account is not Genuine Savings. Neither is the First Home Owner’s Grant.

Example: Son wants to purchase First Home worth $400,000. Has good income/job.
Currently lives at home with Mum & Dad. Also has a personal loan which he repays $300pm.

Bank Requires:
a) Personal Loan Statements or credit card statements showing past 6 months repayment history
b) At least $20,000 (5%) in a savings account
c) Last 6 months statements showing a gradual increase in savings, building the deposit. Explanation of large deposits.

If Genuine Savings cannot be established, then the next best option is a 90% LVR Home Loan where you do not have to prove Genuine Savings and Mum & Dad can help out with cash.

To find out more about these recent changes, please call our Plan Assist Mortgage Team on 02 9449 2333.