In the news that was a bit surprising to our office full of people who broker home loans in Rockingham, Kwinana and Baldivis, WA State Government has proposed some changes in the budget due to take effect on 15 September, 2013, that has a lot of people up in arms.
First Home Owner Grant (FHOG)
The value of the First Home Owner Grant (FHOG) will be increased from $7,000 to $10,000 for first home buyers who choose to purchase new homes. However, for those who choose to purchase established homes, the grant is decreased from $7,000 to $3,000.
The outlook for first home buyers isn’t as bad as it sounds, though. They will still be exempt from stamp duty on both new and established homes up to $500,000, while those who buy vacant land will be exempt up to $300,000. Turning the numbers, that means that an established home that costs $500,000 will be exempt from approximately $17,000 in stamp duty, while a block of land purchased for $300,000 will yield a savings on stamp duty of around $10,000.
Supplemental assistance for first home buyers is available from the Home Buyers Assistance Account. This provides a grant up to $2,000 to first home buyers for incidental expenses, as long as they buy their home from a licensed real estate agent and the house costs less than $400,000.
Significance to First Home Buyers
So, what does this actually mean to first home buyers? REIWA is up in arms about the decrease for established homes. According to a previous REIWA statement, 70% of first home buyers will be negatively impacted by the changes. Treasurer Troy Buswell said that he expected less grant money to go out overall, due to less first home buyers purchasing new houses than established houses.
While REIWA is not in favour of the changes to FHOG, the Master Builders Association is happy about the announcement. According to MBA Housing Director Gavan Forster, the increase in the grant for new houses could mean an many as 900 more new houses built than without the changes.
Potential Jobs for More People
In addition, Forster thinks that as many as 5,000 new jobs could be created due to the increase in construction, not counting all of the peripheral jobs created in industries that serve the construction industry. Forster projects that as many as 5,000 more jobs will be created in this fashion.
While we can never make blanket statements because every buyer’s situation is different, we think it can be safely said that it has just become more advantageous for first home buyers who can afford to do so to buy a new home than an established home.
The Options for First Home Buyers
However, that doesn’t mean that it is impossible for potential first home buyers to actually buy homes and doesn’t mean that the market for established houses is going to sustain a lot of damage. What it does mean, though, is that it is more important now than it has ever been to choose both your homes and your financing properly.
A motivated first home buyer who wants to find a new home has myriad choices, as many developers are competing to price homes in the first home buyer range. Sometimes, people who never thought they could afford a new house are surprised to find that they can.
Since the grant has been raised to $10,000 for new houses, it could, indeed, create a sub-market of new homes designed for first home buyers. It is worth keeping an eye on.
How We Can Help You
Our area of expertise as mortgage brokers is home loans, specifically in the Rockingham, Baldivis and Kwinana markets. We believe that it is even more important now than it ever was to find the right loan with the right terms for your house. Increments as small as a quarter of a point can add up to thousands of dollars over a 30-year mortgage.
That is where Smartline Mortgage Brokers Rockingham comes in. We have spent years establishing relationships with virtually every lender in Australia and we know who has the right product for most situations. We can compare products for you from multiple lenders and help you determine which is the right one for your situation.
In the mortgage industry, one size doesn’t fit all. Your “home” bank or even your favourite lender might have plenty of great products that are perfect for many people but nothing that really works for you. At Smartline Mortgage Brokers Rockingham, we have access to thousands of different loans and a knowledgeable crew that keeps on top of all recent developments in the home loan industry.
We are Within Reach
Call us on (08) 9527 1800 today. Make sure that you are getting the right loan for your needs.