5 Tips to Beat the First Home Stampede

Author – Graeme Salt

First Home Buyers are set to rush to the market thanks to a new government scheme which goes live in a few weeks.

But with the scheme only available for 10,000 homes a year, Australians are being encouraged to get their act together to avoid being pipped to the post.

The First Home Loan Deposit Scheme comes into force on 1 January 2020 and is aimed at assisting low and middle incomes get on the property ladder – often with as little a deposit as 5 per cent.

The program will be open to singles with a taxable income up to $125,000 per year and couples earning less than $200,000 per year, and will apply to owner-occupied loans on a principal and interest basis.

But it is not yet confirmed which banks will be involved in the scheme – though it is known that only 50 per cent of loans will go through the Big Four,

Even before the scheme comes into force, there has been a surge in first home buyer activity and Australians are being encouraged to get ready to make an application – or miss out

In Sydney and Melbourne, first home buyers now comprise more than 25 and 30 per cent of their respective owner occupier markets; more than double the proportion of first home buyers prior to the market peak.

And, the scheme is likely to add more fuel to the fire.

Wannabe first home-owners are being encouraged to get themselves ready to avoid missing out. 

1. Keep expenditure to the bare essentials – those likely to miss out under the scheme are likely to be those who can’t prove they have got a grip on the household budget
2. Keep Christmas and holiday expenditure to the minimum – the scheme kicks off in 1 January and those who have blown it during the break will be beaten to the punch by those who can demonstrate financial discipline
3. Keep your job – otherwise you may have to wait till you complete your probationary period and miss the boat
4. Minimise your credit limit – having a $50k platinum Amex may be good for your ego.  But the banks see that as an opportunity for you to get further into hock and may they may will reduce your mortgage limit accordingly
5. Save, save, save – sure you can borrow up to 95 per cent of the purchase price without having to pay lenders mortgage insurance.  But the banks still prefer borrowers who can save.

In a few weeks, the First Home Loan Deposit Scheme is likely to add kero to the fire of a hot market for homes less than $700,000.  First home buyers who don’t get their act together now are likely to miss the boat

If you want to know more about the First Home Loan Deposit Scheme and how you can get help buying your first property, please call your Origin Finance broker on 1300 30 67 67.