Under the scheme, a one-off grant of up to $7000 is payable to first home owners that satisfy all the eligibility criteria.

Along with this FHOG most states also discount their transfer duties and mortgage duties for First Home Owners. NB: from 1 July 2008, Queensland mortgage duty on property contracts has been completely removed.

On 14th of October 2008 the Federal government announced further assistance to first home buyers entering into contracts after that date, in the form of the First Home Owners Boost. This effectively increased the grant available to a maximum of $21,000 for those purchasing or building a newly constructed property. If you are purchasing an existing property the maximum available under this scheme is $14,000.

For more information about this go to http://www.firsthome.gov.au/

Some states have further grants available depending on where and what you are intending to purchase. The above link will take you to the relevant state government for further information.

This is great news for those trying to break into the property market and not get left behind.

Probably the most difficult and yet the most significant financial milestone is getting into the property market with your first property. It establishes a starting point for not only a home base to build your home and family life around but it is also, for many, a starting point on their accumulation of wealth.  It is a base from which you can leverage the growing equity into other properties or other investments.

For most this first home purchase is ground zero in their financial life.

Currently the lower price end of the market, which is dominated by first home owners, is strong… demonstrating that many people are taking advantage of this “perfect storm” of low interest rates and property prices that have hesitated or even declined slightly.  It is an ideal time for all property investors and those who can access the grant are making full use of this golden opportunity.

This is a great opportunity for those who can jump on board now, however, even with reduced interest rates there are still some without the necessary incomes to find a lender who will give them a loan.

For these people there is little consolation as they sit on the sidelines and watch the opportunity of their lifetime pass them by.  Possibly they have a sufficient deposit and may not need the FHOG; rather be in need of extra income to meet the banks servicing criteria.

The answer for people in this situation may be taking on an investment property as their first property.  “But won’t they lose the First Home Owners Grant”? That’s what I had previously thought too… but I was wrong. The answer is “No, not necessarily”!!! There may be an alternative to them letting this “Perfect Storm” pass by.

The name “First Home Owners Grant” can be misleading.  Many people assume it means First Property Owners Grant.  The key word is “Home”.  It is possible to own investment property and still be eligible for the FHOG later.  In fact you may wish to purchase a property as an investment and then later move into the property to claim the grant.  Check the relevant government web site for your state to confirm you still satisfy the requirements of the grant.

Existing First Home Owner Grant eligibility criteria (Queensland):

1. Be a natural person (i.e. not a company or trust), at least 18 years of age and whose interest in the property is not held subject to a trust
2. At least one applicant is an Australian citizen or a permanent resident
3. At least one applicant will reside in the home as their principal place of residence for a continuous period of at least 6 months commencing within 12 months of completion of the eligible transaction
4. Not have previously received a First Home Owner Grant in any State or Territory of Australia
5. Not have previously owned or held a relevant interest in a residential property anywhere in Australia prior to 1 July 2000
6. Not have occupied for a continuous period of at least 6 months, a residential property in which they acquired a relevant interest on or after 1 July 2000 anywhere in Australia

Points 5 & 6 are important and often missed.  Under the Queensland criteria, and it is very similar in other states, it is possible to amass an investment property portfolio without impacting on your eligibility for the grant when you decide to settle down somewhere. That is, as long as none of your properties were purchased prior to 1 July 2000 and you did not live in any of them for 6 consecutive months or more.

Therefore, building equity through investment properties can actually assist you to take advantage of the current economic opportunities and increase your wealth… equipping you to purchase a better home later.

For those who are happy to stay at home longer or remain renting there is no reason to let the opportunities go past.  Explore the possibilities, do the maths.  A $300,000 investment property increasing at an average of 10% per year equates to $30,000 after one year, $63,000 after two years and so on.  This has certainly got to be a whole lot better than doing nothing.