Red_V_Roger

On the radio this week, they have been advertising the new First Time Home Saver Bank Accounts, where you save money and then the goverenment will contribute 17% on top of your personal contributions up to a maximum of $850 for the 2008–09 financial year.

To open one of these accounts, you need to:

- be aged over 18 and under 65 years
- have a tax file number you can quote in your application
- have never owned a home in Australia that has been your main residence
- have never previously had a first home saver account.

So no mention of PR or not open to 457 holders.

It looked a good way of making a bit of money before we buy our house.

Then I read: "Make personal contributions of at least $1,000 for each of four financial years (not necessarily consecutive years) before you can withdraw your money. "

So looks like it is tied in to a minimum of 4 years saving up

Anybody else thought about it?

benlast

Hmm. What happens if you buy a home during those four years (i.e., after you open)... can you still keep the account?

Cheers
b

autorock

Yeah, my Dad (who lives in Melbourne) told me about this.

We want to move to the Gold Coast and buy a big block of land in about 5 years so it's perfect for us.

Here's some sums for anyone thinking of doing this:

To get the maximum of $850 from the government, you need to contribute $5,000 a year.

These figures are worked out on an account with 7% compound interest:

Annual contribution of $5000 for five years:
$416 personal contribution per month
$850 Government's contribution per year

=Grand Total after 5 years $34,901.53

Not bad after total personal contributions of only $25,000.

This is a profit of $9,901.53 of 39.6% including interest and gov contributions. So it's a huge boost...

Also, you don't pay any tax (well the tax of 15% is paid by the account provider - ie. your bank).

There's nothing to suggest that you can't get one for your spouse and one for yourself either which makes it even better...

IvanM

I asked about that. Your money will get put into superannuation if you buy a place within the four years. The account will then get closed. I think the account is aimed at school leavers.

Deutschmaster

Hmmm, I didn't like the top limit of cash you get back from the government. It seems to be more to help people raise a deposit and take out an unaffordable home loan rather than to actually help with affording a house. How about an unlimited limit of cash back for four years - now that would be something.


I'm thinking of buying somewhere here in a couple of years time - hope to see where the prices will end up. It seems that for whatever view that you have where the market is going, there's an economist saying what you want to hear.

I'm wondering whether the Aussie market is about a year or so behind the UK. It wasn't that along ago when the UK media were going on about how house prices can't possibly fall, too much demand for housing, that the UK economy is fundamentally different to the US blah blah blah. And look what happened. The Aussie media has changed it's tone over the past few months. Before the Herald Sun would be banging on about 'strong clearance rates' etc. Now there seems to be a more subdued tone that 'yeah prices have fallen a little but no worries everything will be back to normal by 2010'.

I'm just going to sit back and save like crazy for a bit. Dunno why there is so much excitement about the first owner grant going up. Lets face it, with a unit on the outskirts of melbourne costing at least 200k and a house at least 300,000. Putting up the grant by seven grand or whatever it is isn't exactly going to make everything affordable, especially when the grant is presently only going to run until June next year. What does make a difference to me is how low house prices are going to go. Don't know if I should tie my money away for the next 4 years. What happens if prices bottom in the mean time then go up? Then again, they may still be falling/are flat.