First Home Buyers are lucky in many ways. Banks, lenders as well as the Government have several enticing offers, subsidies and tax benefits lined up for them, just so that it becomes easy to buy their first home.
Not sure if you are financially ready to be a First Home Buyer. Don’t worry! Banks, Lenders and even the government has you covered. Read on to know how to avail the maximum benefits while looking at finance options for your home.
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The First Home Owner Grant (FHOG) is a one-off government payment designed to encourage and assist would-be First Home Buyers across the country to purchase a property. The size of the grant and the eligibility criteria attached to it differ in each state and territory, but in most places it applies to first-time property owners who are either purchasing an existing home that has never been lived in, or building an entirely new home.
In addition to the FHOG, several Australian states and territories offer eligible first-time home owners concessions (reduced rates) or exemptions on stamp duty – otherwise known as transfer duty – which could help these homebuyers further reduce their costs.
Whether or not you can use the First Home Owners Grant as a deposit largely depends on your lender and the rules around how they consider a borrower’s eligibility. While some lenders may allow you to use grants as part of a deposit, other lenders may require proof of ‘genuine savings’ in their home loan application process. This typically means that you need to have saved about 5% of the purchase price as a minimum.
Keep in mind, however, that your deposit is just one part of the equation in working out if it’s a suitable time for you to buy. Having a bigger deposit means that you’ll have more equity in your home, which could reduce your likelihood of experiencing negative equity and mortgage stress. Seeking professional financial advice may be helpful to support you in considering if it may be a good time for you to buy, based on your personal circumstances and needs.
Wider First Home Buyer assistance that may be available to you includes the First Home Loan Deposit Scheme (FHLDS) and Family Home Guarantee.
First Home Loan Deposit Scheme
Under the First Home Loan Deposit Scheme (FHLDS), which was launched on 1 January, 2020, the Australian Government partially guarantees some low-deposit home loans each year. These are set aside for eligible low- and middle-income earners who have saved up a deposit of at least 5% of a property’s value, which could help these borrowers avoid the cost of lender’s mortgage insurance (LMI). The scheme can potentially be used in conjunction with other state and territory grants, as well as any incentive or deal your home loan provider may offer to first home buyers. The scheme covers eligible first home buyers looking for a new or existing home.
Family Home Guarantee
In the 2021 Federal Budget, the government announced a new type of scheme, called the Family Home Guarantee. This separate scheme offers to guarantee the loans of single parents (with dependents) who want to build or buy a home with a deposit of 2% (subject to the individual’s ability to service a home loan), the National Housing Finance and Investment Corporation (NHFIC) states. The single parent does not have to be a First Home Buyer, but does need to meet other eligibility criteria.
Grants, concessions and other incentives by state or territory
While some of these incentives and schemes may be used at the same time on a single property, be sure to check carefully if that’s the case in your situation, as there may be exclusions. Here’s an overview of some of the first home owner grants, concessions and other incentives you may be eligible for at the time of writing.
First Home Owner Grant NSW
The New South Wales Government offers several assistance schemes, including (at the time of writing):
First Home Buyers Assistance Scheme – Full or partial exemption of transfer duty if you are buying your first home (new, existing or vacant land) in Australia that is valued at $1 million or less (up to 31 July, 2021). Other criteria and limits apply.
First Home Owner Grant (New Homes) – $10,000 is available for people buying a newly built, off the plan or substantially renovated home, according to Revenue NSW. If you purchase a newly built house, townhouse, apartment, unit or similar, or purchase a substantially renovated home, the purchase price must not exceed $600,000. If you purchase a house-and-land package, or buy vacant land and then sign a building contract, the total combined cost must not exceed $750,000. Other criteria and limits apply.
Check your state’s eligibility criteria, and sign-up to our First Home Buyer Toolkit to access a handy factsheet that explains how to apply for the FHOG.
So, what are you waiting for? Find out what your state’s eligibility requirements are and how you can apply for the FHOG. We’re there for you every step of the way.