Your Biggest Purchase Ever: Why Now Is a Good Time

Guest writer: Camilla Hobbs

Get your mind off the Givenchy heels and Balenciaga handbag; I’m referring to your first home.

I know, the thought of a 30-odd-year debt is daunting for first home buyers, but unlike high-interest savings or long-term investment in shares to begin cementing your financial foundations, the prospect of investing in something you can touch, feel and decorate is quite exciting!

I ♥ FHOG and FHOBS
Isn’t it fun when you open a Christmas or birthday card and cash falls out? Money to spend that you didn’t have to work a second for! That’s kind of how I feel about FHOBS – a.k.a the First Home Owners Boost Scheme – introduced by the Australian government on October 14, 2008.

Of course before that was the First Home Owners Grant (FHOG); a helping hand of $7000 given to eligible home buyers from July 2000. Just quietly, I’m very pleased I was still gallivanting around Sydney spending my hard-earned on shoes at the beginning of last year, because the Boost Scheme (FHOBS) is double the helping hand. That’s $14,000 offered to (eligible) Australians so they can purchase their first home – and I’m about to become one of them!

Before you get carried away saving a list of favourites at Domain.com.au – I’ve narrowed mine down to 28 ideal homes, and five that are perfect! – it’s important to note that $14,000 gets sucked away pretty quickly on all kinds of boring but necessary stuff like stamp duty (if the value of the property is over $500,000), council rates and mortgage insurance. Oh and then there’s legal fees, inspection fees and loan application fees – all of them with price tags that make your net-a-porter shipping fees appear paltry.

But imagine the wardrobe-expansion restraint you’d have to develop to save up this 14k on your own? So…

Are you eligible? The answer is yes if:

• you are buying or building your first home as a natural person, not as a company or trust

• you, or a joint applicant, is an Australian citizen or a permanent resident of Australia

• you or your spouse (including de facto spouse) have not owned a home in Australia prior to 1 July 2000 (this includes investment homes)

• you or your spouse (including de facto spouse) have not resided in a residential property in Australia in which you acquired an interest, on or after 1 July 2000 for a continuous period of at least six months

• you occupy the home as your principal place of residence for a continuous period of at least six months commencing within one year of the completion of the transaction to which the application relates

• you are at least 18 years of age

• you have not already received a grant.

If you’re unsure, most lenders will discuss the FHOS & FHOBS with you and help to process to applications on your behalf. There are pages and pages of extra information online but a few points I found interesting are:

• If you opt to build your first home, you are entitled to $14,000 plus a boost of $7,000 – that’s $21,000 free dollars!

• The grants are available to 18-65 year-olds who meet all other criteria. Initially the term “first home buyer” made me think it was available to gen-X and gen-Y only.

• If the person you’re purchasing a home with has already received the grant you cannot get it again. I guess it’s been tempting for some to try getting around this by presenting false information in relation to an application because a penalty of up to $11,000 is awaiting those who do.

• Currently there is no limit on the price of the home. However, effective from 1 July 2009 (subject to Federal Government approval) the First Home Owner Grant will be capped and only be available for properties valued up to $750,000.

JSA Financial Planning is SNOBS’ voice-of-financial reason for our Confessions of a Shopaholic month of February. The team at JSA are there to help you stay as finance-conscious as you are fashion-conscious.