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It may be worth foregoing first time grants

By Staff Reporter
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First time buyer grants aren’t necessarily all they’re cracked up to be, according to a mortgage advisory company.

Foregoing the grant completely and making the property an investment immediately is the best approach for some buyers, according to Smartline Personal Mortgage Advisers.

This is particularly the case for young professionals and those with the potential to earn significant future income.

“First home buyers are often stretched in terms of their savings and borrowing capacity, trying to get a foot in the door of the property market while only at the beginning of their lives and careers,” said Smartline adviser, Miriam Castilla.
 
“The reality is, for most first home buyers their first property isn’t their long-term home, but rather a stepping stone.

“Some of them aren’t even keen to move out of mum and dad’s house or their current rented property; they simply want to make a start on getting into the property market.”

This could be the best situation for first timers as they become ‘renter-investors’, who rent their home and have an investment property.

Investment properties also typically require fewer savings as a deposit, as lenders take the rental income and the tax deductibility into account.

“If they do not live in the new property for a period of six or more months, they will still qualify for the first home owner grant down the track, when they are ready to buy the home they do want to live in,” said Ms Castilla.

“Therefore, not claiming the grant - at least for now - can be a very smart move for those who want to make that first step into property.”

First time investors must do their homework and decide why and where they intend to buy.

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