The first home buyer scheme (previously called the FHLDS) has officially been extended on July 1 2022 for another year which is great news for first home buyers. This years scheme includes a further 35,000 allotments (applications). What this means is that first home buyers can purchase a property with only a 5% deposit (as opposed to a 10-20% deposit), however that is not the only advantage. Here are 4 more reasons that this is the best grant that will save you thousands if not tens of thousands of dollars.
- 5% Deposit: Because you only need to put down 5%, if you have any extra funds left over, you can put this in an offset account attached to your home loan account, this will reduce your interest costs for your loan (speak to your broker about the best way to structure your loan if this is the case for you).
- You avoid lenders mortgage insurance (LMI): This saves you thousands of dollars, the reason for this is because the government is standing guarantee for you and for the remaining 15% required to make up a 20% deposit.
- The banks will treat you the same as someone with a 20% deposit (under the first home buyers’ scheme): What this means for you as a borrower is that you will save thousands per year in interest payments, which gives you the ability to make extra payments on your home loan saving you even more money. You can work out how much, extra repayments can affect your home loan and reduce your loan term by using our offset calculator here.
- You can still use other grants in conjunction: the stamp duty exception is still in play, which will save you tens of thousands (depending on how much you are spending). You can work out the stamp duty savings here.
Ok so that is the good news, what else do I need to know?
To apply for the FHBG, applicants must be:
- applying as an individual or couple (married /de facto)
- an Australian citizen(s) at the time they enter the loan
- at least 18 years of age
- earning up to $125,000 for individuals or $200,000 for couple, as shown on the Notice of Assessment (issued by the Australian Taxation Office).
- intending to be owner-occupiers of the purchased property
- first home buyers who have not previously owned, or had an interest in, a property in Australia
A couple of points to remember:
- You have 3 months to buy from your approval date: This can be a challenge and cause stress/anxiety, however you can get a 1 month extension should there be a contract of sale in play at the end of your 3 months. With that being said, if you run out of time you just need to be prepared to start again with the application process, so you can get an extension of a further 3 months.
- There are price caps per state: If you are looking to make a purchase via this scheme, there are price caps and they vary. Here is a link to a government site where you can check price caps in areas you are looking to purchase.
For the past two years that this scheme has been running, there have been 10,000 allotments given to applicants which have been taken up very quickly by the long list of first home buyers looking to take their first home buyers. As brokers we see first home buyers miss out on these limited spots so our recommendation is to not waste time, speak to a broker and get your application for these allotments quickly so you don’t miss out on this once in a generation opportunity.
If you have any questions please reach out to us at firstname.lastname@example.org or call us on 1300 899 819