First home buyers can use the extension of the boost to the federal government’s grant to pull their finances into better shape before applying for loans, a mortgage broker says.

Resi Head of consumer advocacy Lisa Montgomery said the additional six months extension to the boost for the first home owners grant (FHOG) will allow borrowers to build their savings to meet the requirement of lenders.

“The FHOG scheme - boosted or not - should be viewed by borrowers as a bonus to supplement their own funds, as those savings show lenders that the borrower is financially disciplined enough to commit to the rigours of a mortgage,” Ms Montgomery said.

The federal government will extend the boost to the first home owners grant by six months to December 31.

Since October 2008, first home buyers have received an extra $7,000 when purchasing an established home and an extra $14,000 for new homes, on top of the $7,000 provided under the first home owners scheme.

The boosted grants were due to end on June 30 but will now apply for homes purchased on or before September 30 this year.

The extra grants will then be phased down to an additional $3,500 for established homes and $7,000 for new homes up to December 31, 2009.

After that date the $7,000 first home owners scheme continues in its original form.

Some borrowers may have rushed into using the first home buyers grant, Ms Montgomery said.

“However for those still in the hunt for a home, the federal government’s last minute announcement to extend and then phase out the boost to the FHOG over the next three to six months can now offer them a fresh opportunity to take their time and plan ahead,” she said.

Ms Montgomery said those looking to buy their first home should lift their savings, budget for interest rates to rise two to three per cent, not to expect more rate cuts and investigate the deals for both property and available loans.

AAP