We know that finding your way into your first home can be daunting to say the least, let alone navigating through the current government schemes which you may have access to. There are now up to five schemes you could be eligible for!
Stamp Duty Concessions, First Home Owners Grant (FHOG), First Home Loan Deposit Scheme (FHDLS), First Home Super Saver (FHSS) & Homebuilder are all current schemes which have varying benefits and eligibility criteria. In this post we will simplify these to help make them a little easier to understand without boring you too much and if you would then like further information, we are more than happy to have a chat to help you determine if you qualify.
If you are able to qualify for one or even multiple schemes, this could save you tens of thousands of dollars and mean you can get into your first home a lot quicker than you originally thought.
STAMP DUTY CONCESSIONS
Stamp Duty is a one-off fee paid to the state government based on the State the property was purchased in. This fee can be substantial and often a cost that is forgotten when people are searching for a property. Again, depending on the state you purchased the property in, there are discounts on Stamp Duty payable and each state provides varying discounts for first home buyers. As we are Victorian based we will outline the current criteria for the stamp duty concessions.
Firstly, what does Victoria’s State Revenue Office (SRO) determine to be a first home buyer? This can be found on the SRO website
Once you have established if you are a First Home Buyer or not, the current stamp duty benefits are as follows:
Price Duty Saving
This is a HUGE saving compared to someone else (who is not a First Home Buyer) buying the exact same property you are looking at.
FIRST HOME OWNER GRANT (FHOG)
If you are eligible for the FHOG you will receive a $10,000 grant to assist you with the construction of your first home or if purchasing a brand new home. Depending on the lender this can be used as a deposit and in conjunction with the savings you already had. For areas classed as regional, the grant is a whopping $20,000!
That’s an extra $10,000 or $20,000 compared to a non-First Home Buyer doing the same thing.
The criteria is similar to the stamp duty exemption with additional ‘new property’ criteria. To determine if you are eligible, you can complete an online questionnaire by clicking here
FIRST HOME LOAN DEPOSIT SCHEME (FHLDS)
Don’t have much of a deposit? Then this scheme is for you.
You may have heard people say you need a 20% deposit plus costs in order to buy, but we all know that’s an old wives’ tale. Yes, it is the most cost-effective way of doing it because normally, any less than a 20% deposit requires you to pay another extra one-off cost called Lenders Mortgage Insurance (LMI). The reason the lender makes you pay this extra cost is because you are borrowing such a high amount of the property value, for example, your loan is more than 80% of the value of the property you are purchasing.
What the FHLDS allows first home buyers to do, is to avoid paying that extra LMI cost even though you don’t have the 20% deposit. The Government effectively provides the lender with the reassurance that the lender will get their loan paid out if things went bad and you weren’t able to pay your loan etc. It doesn’t mean you are off the hook, you still need to make your repayments, but it provides the lender with some security, therefore they don’t need to charge you the LMI cost.
The scheme currently allows for only 10,000 positions per financial year with 10,000 recently been released on July 1 2020, so reserving a spot is imperative before jumping into buying something!
As this is a federal government scheme the criteria to be eligible differs somewhat. To be eligible you must meet first homeowner criteria, income criteria, savings criteria and purchase price criteria.
The government has set up a great tool to check eligibility for this scheme click here.
THE HOMEBUILDER SCHEME
Whilst this is not a scheme exclusively for First Home Buyers, it is still a scheme which First Home Buyers have access to. If eligible this scheme provides a $25,000 cash grant to you!
To be eligible for the scheme you must meet particularly build criteria, time frames and income requirements. This grant will be administered by each State Government and at this point in time we are still waiting for further information on when the grant will be paid and some other particulars but it could potentially be another $25,000 towards your purchase.
The home must be a new owner-occupied property build or renovations of at least $150,000 to an existing owner-occupied property.
The eligibility for this scheme can be found by clicking here
FIRST HOME SUPER SAVER SCHEME (FHSS)
This scheme provides an incentive to start saving for your deposit in a more tax-effective way.
Effectively this scheme allows additional payments into your superannuation in a more tax-friendly way which further boosts your savings/deposit. When you are ready to buy, the additional amounts you deposited into your super fund are tracked via your MyGov account and can be utilised. These are taken out of your super to form part of your deposit on your first property. Superannuation can be complex therefore we would recommend seeking financial advice regarding this scheme but it could be a way of increasing your deposit just by saving tax.
More details on this scheme can be found by clicking here
If all of this is still sounding like gibberish, don’t worry we can help you understand each scheme and assist you in determining your eligibility! We can also assist you in gaining a loan approval incorporating the schemes you are eligible for. If you are able to qualify for one or even multiple schemes, this could save you tens of thousands of dollars and mean you can get into your first home a lot quicker than you originally thought. We can help by determine your budget, utilising these schemes.
Don’t hesitate to get in in touch with us as a pre-approval is very important before buying!
NICHOLAS BERRY & TOM BAILEY
INTEGRITY FINANCE PTY LTD
Nicholas Berry Credit Representative Number 472439 and Thomas Bailey Credit Representative Number 472440 are Credit Representatives of Integrity Finance (Aust) Pty Ltd – Australian Credit Licence 392184.
This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.