The cost of owning a home in Australia has skyrocketed, with a 23.7% increase in prices by the end of 2021. This has made it seem like a distant dream for the everyday Australian family or individual. However, In 2023, it’s not anymore. The government has come to the rescue of first-home buyers with various grants and schemes that make the journey to homeownership a reality.
These schemes offer a range of benefits for Australians looking to enter the market, from lower deposit requirements to financial incentives in the Australian real estate market. So now, say goodbye to renting and hello to building equity and stability. Get ready to turn the key and make your homeownership aspirations a reality by efficiently unlocking the door to your dream home in 2023.
Curious about what these schemes are and how these grants can ease the process of buying a home in Australia? Read below for more information.
Why is now a Good Time to buy your First Home in Australia?
While interest rates reaching numbers that we haven’t seen in over a decade many potential buyers have turned away from the property market due to the fear of increased mortgage repayments, or steep declines in their borrowing capacity. While both are definitely things to be mindful of, the Australian government and each of it’s states have implemented several first home owner schemes to effectively combat these rate hikes and drive demand back into the residential market.
Many of these schemes such as NSW’s First Home Buyer Choice, and Shared Equity scheme kick into effect in 2023. These schemes offer benefits such as lower deposit requirements, financial incentives, and increased borrowing power, making homeownership more accessible for the first home buyers.
How Can Government Incentives Help You Save a Fortune?
The Australian Government’s First Home Buyer schemes are a great initiative for those who are looking to build up their wealth, or purchase their own home and begin their Australian dream.
With the rental crisis in Australia at the moment, investors have more control over rental prices due to the lack of supply of untenanted properties, making rental price skyrocket. Instead of paying a fortune towards rent, a rising cost that is never returned, owning a home allows individuals to build start building their equity and have a place of their own.
With schemes available that can complete remove the cost of stamp duty, or minimise the deposit even down to an extremely low 2%, one of the biggest hurdles of owning a property is minimised, the deposit. This makes entering the market extremely accessible and can save first home buyers tens of thousands of dollars.
Types of First Home buyer Schemes
The Australian government offers multiple schemes to help first-home buyers. Some of them are nationwide, while others are state-specific schemes. Let’s run down to each for a detailed insight.
Nationwide Schemes
Following are some of the most sought-after nationwide schemes are first home buyers in Australia.
1. First Home Guarantee
The First Home Buyer Grant (FHBG) is a government-funded scheme to provide low-cost loans for first-home buyers in Australia. The plan allows eligible candidates to buy or build their home with the least deposit of 5 % without spending dollars on Lenders Mortgage Insurance (LMI). LMI is a cost to the borrower that acts as a form of insurance to the lender, usually when a deposit is less than 20% of the property value. It is put in place to protect your lender in the event that you default on your home loan and there is a ‘shortfall’. A shortfall happens when the proceeds from the sale of your home are not enough to cover the outstanding amount you owe to your lender. This expense can usually cost thousands of additional dollars which can be saved through this scheme. The FHBG has 35,000 places available from 1 July 2022 – 30 June 2023.
2. First Home Super Saver Scheme
The First Home Super Saver (FHSS) Scheme is an Australian government initiative that allows first-home buyers to use their superannuation savings to help purchase a home. These voluntary super contributions of $15,000 to 30,000 annually can help you save a deposit for the intended property with concessional tax treatment on release. The scheme has no limits for the number of applicants and comes with so many advantages, including:
- Speed up your savings
- Tax benefits
- Meet genuine savings criteria
- Control over your wealth
3. Family Home Guarantee
The Family Home Guarantee (FHG) Scheme is designed to help eligible single parents enter the property market. The scheme allows individuals to buy a home with just a 2% deposit.
4. Regional First Home Buyer Support Scheme
The Regional First home buyer scheme is for the people living in regional areas that need help to afford their own homes. The government intends to provide regional Australians a chance to purchase their first property with a least deposit of 5% without paying the Lender’s Mortgage Insurance (LMI).
5. Help to Buy Scheme
The Help to Buy scheme is another significant step in providing financial assistance to the intended home buyers in Australia. The government offers a 40% contribution to the home buyers in property purchase price on new land and 30% on existing land.
Note: Eligibility for all the above schemes includes being an Australian citizen or permanent resident, being a single parent or having dependents. The income cap for each government grant is given below:
|
SCHEMES |
INCOME CAP |
|
First Home Guarantee |
$125,000 per person and $200,000 per |
|
First Home Super Saver Scheme |
$50,000 per person and $100,000 per couple |
|
Family Home Guarantee |
$125,000 |
|
Regional First Home Buyer Support Scheme |
$125,000 per person and $200,000 for |
|
Help to Buy Scheme |
$90,000 per person and $120,000 per |
State-Specific Schemes
Each state has its own policy concerning:
1. First Home Owner Grant (FHOG)
2. One-Off Transfer Duty (Stamp Duty) Concessions
NEW SOUTH WALES
1. Stamp Duty or Annual Property Tax? – The First Home Buyer Choice Incentive:
Building upon the highly popular First Home Buyer Assistance Scheme which allowed buyers to obtain an exemption or concession on transfer duty charges comes the extension to the scheme, The First Home Buyer Choice. Under the current scheme, a buyer was exempt from paying stamp duty for a property under $650,000 and paid a concessional stamp duty if the value of the property was between $650,000 and $800,000.
Building upon this scheme is the FHBC which allows buyers purchasing property between $800,000 and $1.5 million to choose between paying the stamp duty in one go, or pay an annual property tax instead. Stamp duty is a one-time payment based on the value of a property, paid at the time of purchase and is one of the most significant roadblocks for buyers who intend to purchase property due to the high cost.
According to the new scheme, If a buyer goes with the scheme he will pay an initial fee of $400 plus 0.3% of the land value for owner-occupied properties and $1500 plus 1.1 for investment properties. You can also get a stamp duty concession for homes with specific costs. For a better understanding of stamp duty concessions, see the table below:
|
Stamp Duty |
New Homes |
Established Homes |
Vacant Land |
|
Zero stamp duty |
Costing less than |
Costing less than |
Costing less than |
|
Concessional Rate of |
Home costs between |
Home costs between |
Land values between |
Below are some examples a comparison of stamp duty vs the annual property tax. As you can see below, the annual property tax allows buyers to enter the market with a significantly smaller initial amount than the cost of stamp duty. While the annual property tax could accumulate to a higher amount in the long term due to owning the property for several years, the present value (value right now of some amount of money in the future) of the money you would have spent on the property tax is a lot less. Essentially that means that instead of putting down most of your savings towards a single property deposit, you could utilise your savings for various other purposes such as to save up for your next property or even for other personal expenses.
2. First Home-Owner Grants
First Homeowner grants NSW scheme provides you with $10,000 to purchase a new land property and ensures First Home Buyers Assistance Scheme benefits. However, the property`s worth must not be more than $750,000.
QUEENSLAND
Queensland offers the following grants and schemes for first-home buyers.
- If you are building or buying a house in Australia worth less than $750,000, you can apply for the FHOG scheme, through which you may receive $15,000.
- The Regional Home Building Boost Grant aims to assist regional Queensland homeowners and strengthen regional housing sectors. You can receive $5,000 through the Regional Home Building Boost grant if you purchase a property worth less than $750,000.
- First Home Concession allows you to pay some or no stamp duty concession on new and existing property purchases worth less than $550,000.
- First Home Vacant Land Concession relieves transfer duty if the property you are acquiring for construction is vacant and less than $400,000.
VICTORIA
The Victorian government has introduced several schemes to help people buy their first homes. These include:
- If you are planning to buy or build a new home in Australia worth $750,000 or less, you are eligible for $10,000 FHOG.
- The property must be less than 5 years old.
- A one-off duty reduction of approx. 50% for a Principal Place Residence (PPR) valued at up to $600,000.
- The Pensioner concession is a one-off duty concession for new or established homes worth $750,000
Benefits of First Home Buyer Grants
First Home Buyer Schemes can provide many benefits that are as follows:
1. Financial Incentives: First home buyer schemes offer reduced stamp duty, tax breaks, and government grants to buy a house with minimum investment.
2. Deposit Assistance: Some of these schemes offer assistance with the cost of a deposit, making it easier to get a home loan.
3. Low-interest Loans: First Home Buyers can access low-interest loans to help with the cost of buying a home.
4. Increased Eligibility: Certain schemes may make it easier for First Home Buyers to meet the eligibility criteria for home loans, even if they have a low deposit or limited income.
5. Support and Guidance: The first-home buyer schemes offer support and guidance to help First Home Buyers navigate the home-buying process and make informed decisions.
Stuck With How to Get Your Hands on The Scheme? We Can Help You with That
As one of Sydney’s top-performing mortgage brokers, we have the expertise and experience necessary to help you select the best First Home Buyer scheme per your needs. We deeply understand the eligibility criteria, application process, and required documentation for these schemes and can help you determine if you qualify.
At Kermani Capital, our goal is to ensure the best possible outcome and assist you in securing the financing you need to purchase your first home. You can take advantage of our in-depth market knowledge and the latest developments in the first home buyer scheme by working with us. We will work closely with you to understand your unique needs and circumstances and help you to find the right loan strategy to meet your goals.
So, are you ready to enter the market and buy your first home? Contact us and let us make the entire process seamless for you.
