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Financial Assistance for First Home Buyers

First home buyers scheme and grants

Buying your first home can feel like an impossible dream. With house prices already high, and expected to grow more by the end of 2021, it’s enough to make you give up and move into your parents’ basement for keeps.

But there’s more help at hand than you might think. A number of Government Schemes exist to provide financial assistance to first-time buyers. Plus, one bank has a clever way to boost your deposit. In fact, it’s made helping all Australians own their own home its mission statement.

So, before you crawl under the doona in despair, let’s look at the various initiatives you could be eligible for. You never know, the Great Australian Dream might just be back on!

First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme (FHLDS) was set up by the Australian Government to help first-time buyers get on the property ladder.

Sensibly, they identified the 20% deposit normally required by lenders as the stumbling block for many first home buyers.

And before you say, “What’s-His-Face at work reckons he only needed 5%”, they probably neglected to mention the tens of thousands added to his loan in the form of Lender’s Mortgage Insurance (LMI), which is generally required for deposits below 20%.

As the name suggests, LMI is insurance for lenders to cover themselves if a borrower defaults on their repayments. With the First Home Loan Deposit Scheme, the Government acts as your guarantor to the tune of up to 15% of the purchase price, meaning deposits as low as 5% are possible without the need to pay LMI on top.

Just don’t tell What’s-His-Face at work because he might not like it.

FHLDS eligibility requirements and property price caps

Before you start raiding the piggy bank in excitement, there are a number of eligibility requirements. Obviously, you can’t own or have previously owned a property.

You also can’t have a taxable income of more than $125k a year (single applicants) or $200k (couples). And you need to be looking at what the government literature  describes as a ‘modest home’ rather than a multi-million dollar mansion. first-home-loan-deposit-scheme-fact-sheet-1-july-2021.pdf (nhfic.gov.au)

So, what exactly constitutes a modest home? According to the powers-that-be, it’s anything up to the values listed below:

State/territory

Capital city & regional centres

Rest of state

NSW

$800k

$600k

VIC

$700k

$500k

QLD

$600k

$450k

WA

$500k

$400k

SA

$500k

$350k

TAS

$500k

$400k

ACT

$500k

-

NT

$500k

-

The other thing worth noting is that there are limited places on the Scheme; from 1 July 2021, 10,000 scheme places were released for FY 2021/22.

That said, from 1 July 2021 an additional 10,000 places were also made available on its sister initiative, the New Home Guarantee for FY2021/2022, which is specifically for first-time buyers looking to buy or build a brand-new residential property.

If you think you might be eligible, it’s worth checking the fine print on the FHLDS website  before getting in touch with a Participating Lender.

Oh, we almost forgot, there’s some more seriously good news about the First Home Loan Deposit Scheme. It can be used in conjunction with the various other Government Schemes for first-time buyers, so you could end up being in your own place sooner than you ever thought possible.

Speaking of which, let’s take a look at those other Government Schemes now.

First Home Super Saver Scheme

The First Home Super Saver Scheme allows you to save for your first home via voluntary deposits to your superannuation fund. These are taxed at the concessionary super rate of 15% rather than the higher income tax rate, so you’ll reach your target amount quicker.

Unsurprisingly, there are eligibility requirements here too. For example, you can’t make use of more than $15k worth of super deposits in a year or $30k in total. Again, it’s worth checking the official website  for full details.

Stamp duty concessions

Stamp duty is the tax you pay when you buy a property. The exact amount depends on a number of factors, but usually comes in at 3 to 4% of the purchase price. It’s technically called ‘transfer duty’ these days but just about everyone still refers to it by its original name, which derives from the time when a physical stamp on a document was required as proof of payment. Most states offer concessions or even full exemptions to eligible first-time buyers.

The table below is designed to act as a guide, but you’ll need to check out the relevant state website for definitive eligibility criteria.

State

Exemptions

Concessions

NSW

New homes valued at less than $800k, existing homes under $650k.

New homes valued between $800k and $1 million, existing homes between $650k and $800k.

VIC

All homes valued at less than $600k, new City of Melbourne homes valued at less than $1 million that have remained unsold for more than 12 months since construction (to June 30, 2022).

All homes valued between $600k and $750k, 50% concession for new City of Melbourne homes valued at less than $1 million (to June 30, 2022).

QLD

n/a

Homes valued at less than $550k.

SA

n/a

n/a

WA

All homes valued at less than $430k.

All homes valued between $430k and $530k

TAS

n/a

50% concession on homes valued at less than $500k (to June 30, 2022).

NT

n/a

n/a

First Home Owner Grant

As you might have gathered by now, the government is super-keen to incentivise the building of new homes. Buying or even building a new property could be the way to go, thanks in no small part to the First Home Owner Grant. The amount varies by state and there is usually a cap on the property’s value. As before, use the table below as a guide but refer to the appropriate state website for full details.

State

Grant

Property value cap

NSW

$10k

$750k

VIC

$10k

$750k

QLD

$15k

$750k

SA

up to $15k

$575k

WA

up to $10k

$750k for properties located south of the 26th parallel of south latitude, $1 million for properties located north of the 26th parallel of south latitude.

TAS

$30k

n/a

NT

up to $10k

n/a

The $2,000 Great Start Promotion

If you’re not eligible for any of the above government schemes, all is not lost. The $2,000 Great Start Promotion from Great Southern Bank means that new or existing first home buying customers who apply for one of our home loans before December 31, 2021 will qualify for a $2k contribution towards their deposit. Boom! Check out the full terms and conditions to see if you could be one of them.

So there you have it. Hope lives! If you’re looking to buy your first home there’s plenty of assistance that can help you achieve your dream of home ownership.