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Financing Implications for Small Business and Potential First Home Owners

Federal & WA State Budget Key Financing Implications for Small Business and Potential First Home Owners

How do the Federal and WA State Budgets affect you?

Recently the Federal and WA State Governments announced their budgets for the coming financial year. In this newsletter, we will look to bring to your attention the main areas in each budget that will likely affect you from a financing perspective.

Federal Budget – Small Business Incentives

As many of you would be aware there were many positives in the Federal Budget for small business, who the government is now seeing as one of the key growth areas for the economy. It’s great that small business is getting financially recognised for the important part it plays in the economy. The
financial recognition has come via the $20,000 asset write off and other tax concessions, so great news there for small business owners.

The Federal Budget incentives are providing an opportunity for small businesses to invest and grow. At ‘All About You’ Financial Solutions we are also a small business, so we recognise the financial challenges faced by other small business operators. Over the years we have helped many
small businesses to grow, with our understanding of the lending market and what can be achieved.

If you have a small business and need finance to grow, perhaps to buy some equipment or to obtain some working capital, then we can help.

WA State Budget – First Home Owner Grant Changes

The WA First Home Owners Grant (FHOG) is designed to assist West Australians to get into their own home. There are currently government grants available for purchasing an established home ($3,000) and a new home ($10,000). The State Budget announced that the $3,000 grant for the purchase of an established home would cease as at 1 July 2015. Whilst that seems to be bad news for potential first home owners, here are some important points to note.

  • The $3,000 FHOG for established homes does not cease until 1 July 2015, so if a property purchase is contracted before that date first homeowners will still receive the $3,000 FHOG.
  • Post 1 July 2015, whilst it is not ideal that the $3,000 FHOG will no longer be available for the purchase of established homes, the stamp duty concessions will still apply. This is the real saving for a first home owner but is not well promoted. For example, on a $430,000 purchase of an existing home, first home owners receive an exemption on stamp duty to the value of $11,440.
  • For new homes (i.e. never lived in or being constructed) the $10,000 FHOG will continue to be available.

At ‘All About You’ Financial solutions, we have helped hundreds of first home owners achieve home ownership. Over time, the government FHOG associated rules change, and bank/lender polices continue to change. Our brokers keep up with these changes to be able to provide the best advice to
those considering entering the housing market for the first time. So if you or anyone you know is seeking to buy their first home, we can help.

Five Top Tips for Potential First Home Owners

Having never been through the process before, potential first home owners are commonly unaware of what will help and what will hinder their chances of successful homeownership.
Below are our top five tips for potential first homeowners.

  1. Save, save and save. The more saved, the better savings habits will be developed. There is no magic in this, simply spend less than what you earn. Banks and other lenders like to see your savings in your bank account for at least three months to qualify for a loan, but the longer the better.
  2. Minimize Other Loans and Credit Cards. Banks and other lenders will take into account your other loans and credit card limits (not the amount owing, but the limit available). We often find that a recent car loan will mean a mortgage cannot be obtained, as the car loan payment coupled with the new mortgage payment is not affordable.
  3. Investigate Using a Guarantor. Typically banks will want to see a 20% deposit, otherwise the loan will need to be mortgage insured. This means an extra level of scrutiny as well as a mortgage insurance premium, which can be hefty. Whilst this premium is often added to the loan, it is still required to be paid back eventually. Often, a guarantor is not available, but if there is an appropriate guarantor available, then this is something that is well worth investigating. There is no cost to the guarantor (they are simply putting up their property) and it can save you tens of thousands.
  4.  Keep Your Financial Nose Clean. By this, we mean ensuring your existing loans and credit cards are paid on time each month and conducting your bank accounts well (i.e. no overdrawing the accounts). It also extends to paying your bills on time to avoid any defaults on your credit file.
  5. Research Your Intended Property Purchase. Research the area where you are looking to buy. For example, crime rates, historical growth rates, availability of public transport, shops and all of the other services most people would like. Once you have chosen a property and are keen to make an offer, get a feel for the neighbours by knocking on the door and asking about the area. After all you will be living there, so you want to ensure it’s a good neighbourhood for you and your family. You’ll be surprised how much the neighbours will tell you!

We hope you found this information of interest, and welcome any comments or feedback from you.

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