They say you should never look a gift horse in the mouth … but if there’s any chance it might come back and bite you, you should at least count its teeth.
Take the recently boosted first time home owners grants, for example. Add in nearly $18,000 worth of stamp duty waived for lower cost homes and the whole package could be worth a shade under $42,000.
That’s a nice start to a new home owner’s finances but it’s not as simple as it seems.
Starting with the basics, first-time home buyers in NSW can now get $10,000 from the State Government towards the cost of their new home. The Federal Government will toss in an additional $7,000, and a further $7,000 if you’re buying a brand new house or unit.
That’s $24,000 so far, but there are conditions. To get the state grant, the property must cost less than $750,000 and you (or an eligible co-owner) must live in the place for six months. To get the full $14,000 from Canberra, the property must be newly built.
Then, presumably to encourage more affordable housing, if the property costs less than $500,000, the state stamp duty of up to $17,990 will be waived.
And there’s your $42k. But remember, you only get the full whack if you buy a brand new unit (or house) for under $500,000.
There are other “gifts” you should look at just as closely. In the recent past some apartment developers offered cash back payments, furniture and short-term finance packages. But when the first-timers had to get proper loans, many discovered the “freebies” had been added to the cost of the apartment, and they actually owed more than their homes were worth, a problem made worse by falling property prices.
So remember you are only a first-time buyer once. Go for the best quality build you can get for your money: no gimmicks, freebies or anything else that tries to sell you a new home as if it were a second-hand car.
This could be a great time to buy your first home – especially when you take falling interest rates into account – but only if you let your head rule your heart.
