As local governments provide stimulus to aid the recovery of the property market, buyers are advised to factor in how banks are using the grants in their loan assessments, according to Momentum Wealth.
While more first home buyers are eager to enter the market now that the government has started to offer grants amid the COVD-19 pandemic. Team leader of Momentum Wealth’s finance division Caylum Merrick reminded them that not all lenders are considering grants in loan assessments.
In fact, some lenders have already said they won’t consider the grants as part of the purchase funds, according to him.
“So while buyers in this instance would still benefit from the additional funds after the purchase, this is obviously going to have a potential impact on some borrowers’ ability to qualify for a loan in the first place,” he said.
Mr Merrick said buyers need to research their options prior to committing to a purchase.
Rather than committing to a block of land to find they won’t qualify for finance with their lender in time to receive the stimulus, buyers should speak to a broker who can compare different products and lender policies to help them identify the right finance solution for their situation, he said.
Ultimately, getting the right advice will be crucial for buyers looking to make the most of the stimulus.
“,” Mr Merrick highlighted.is already experiencing the most affordable conditions we’ve seen in a long time and these grants are offering a really unique opportunity that won’t come around often, but there’s also a lot of noise and advice out there at the moment, and not all of this is in buyers’ long-term interests
“Our key priority is making sure buyers get the most out of this stimulus by not just achieving the best outcome now, but also ensuring this purchase meets their longer-term finance and lifestyle goals.”
New building stimulus measures introduced by the federal and Western Australian state government are driving a significant rise in first home buyer enquiry.
Combined with the existing First Home Owner Grant and duty concessions, the federal HomeBuilder scheme and state Building Bonus package could see eligible first home buyers in Western Australia receive between $44,000 and almost $70,000 in stimulus if they sign a contract to build or purchase a new property under construction before 31 December 2020.
The stimulus could provide a great opportunity for buyers to get into their first home sooner than planned, chair of Momentum Wealth’s residential investment committee Emma Everett.