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FHOG used as a deposit?

Discussion in 'Property Finance' started by gach2, 24th Sep, 2016.

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  1. gach2

    gach2 Well-Known Member

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    Hypothetical here particularly from brokers experiences etc

    Has anyone eligible for the FHOG purchased without a deposit.

    Just read that the FHOG in QLD is 20k and there are still opportunities for new builds for <200k

    which leads that 20k FHOG would be 10% of the property.

    Notsure how this could be done - but say developer provides deposit loan and has a caveat on the property etc or loansharks etc
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Yes, it is possible.

    The mainstream lenders want to see that you're putting something of your own into it. In most cases if you borrow more than 80% or 85% lenders need you to demonstrate at least 5% genuine savings.

    There are lenders that don't require genuine savings but you pay for it in other ways (higher rates, other criteria are stricter). Also keep in mind there's more costs in home ownership than just a deposit.

    Prior to the GFC, several lenders were offering 100% LVR loans with no genuine savings. In Victoria you could buy a house and land at a certain price point, use the grants to cover the minimal stamp duty and (fairly high) LMI. When the keys were handed over, they'd get about $5,000 (residual from the grants) and go buy furniture.

    During the GFC the lenders realised just how risky this practice was and tightened their criteria up.
     
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  3. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Yes you can but dont forget the other costs such as stamp and legals (depending on purchase price and state the stamp duty may be waived or sudsidised) that you will need to show evidence off. These other costs can be paid for by way of gifted funds and in some cases can even be borrowed funds.
     
  4. SK Investments

    SK Investments Well-Known Member

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    There are still opportunities for no deposit first homes, using fhog and stamp duty exemptions for new builds only. Some are financed by Yellow brick road with a selection of builders available.
     
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  5. miximitosis

    miximitosis Well-Known Member

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    This sort of scenario is quite common in Townsville with the new estates. I have done a couple of deals for FHBs recently up to $260,000ish with the grant covering the deposit and costs. Most have been through one of the big 4 lenders with rates still being very competitive (i.e. No different to any other 90%> deal). Main thing is you must have a clean credit report and have evidence of paying rent over 12 months to have a chance.

    EDIT: Forgot to mention this can be through any builder as long as the numbers stack up.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Westpac recognises 12 months rental payments as evidence of genuine savings. $260k is a price point low enough that the grant and waivers qualify for a 95% loan with LMI to 97%.
     
  7. miximitosis

    miximitosis Well-Known Member

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    Spot on. It's a unique scenario possible in Townsville due to generous LVR postcode restrictions combined with low property prices. Although it has higher risk attached to it for lenders, it is a great option for young people to enter the market and to get out of the rent cycle. Only problem is that it is making it very hard for real estate agents in Townsville to turn over low priced entry level stock.
     
  8. gach2

    gach2 Well-Known Member

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    quiet interesting to hear,
    @miximitosis - with the deals you did, did you find the developers/builders promoting this in their marketing?
     
  9. miximitosis

    miximitosis Well-Known Member

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    @gach2 Not so much developers but definitely builders.
     
  10. gach2

    gach2 Well-Known Member

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    im guessing these were builders promoting h+l packages?
     
  11. Positive_Rob

    Positive_Rob Member

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    Wow wish I lived in Townsville ha ha. We just bought in Vic. Established property with no fhog... We get a 50% reduction though :)
     
  12. miximitosis

    miximitosis Well-Known Member

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    Yup. Some builders are even covering the interest repayments during construction. I would hate to see how slim their margins are.
     
  13. tobe

    tobe Well-Known Member

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    It's OK. They are doing fine. You'll find addbacks like this are added to the cost.