The process of buying your first home may be an overwhelming experience and a costly investment. However, it is good to know that there are many initiatives by the Government in Australia that could reduce the cost. These initiatives are aimed at helping first-time homebuyers gain entry onto the ladder of homeownership, either through lowering the cost of buying a home or offering assistance in obtaining a loan for a home.
This is a complete guide to the most popular first-home buyer schemes in Australia:
- First Home Guarantee Scheme:
This program was introduced on January 1, 2020. It is designed to assist buyers who are eligible to buy the property they want with just five percent of their deposit and without the requirement to get Lenders Mortgage Insurance (LMI). First Home Guarantee (FHBG) First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), which is the Australian Government initiative designed to help first-time home buyers who are eligible to purchase homes earlier. The scheme is run through the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government. The FHBG lets first-time home buyers purchase property with a down payment of only 5 percent. As of July 1, 2022, 40,000 new spots under the scheme Home Guarantee were made available for the current financial year, comprising 35,000 spaces for the First Home Guarantee and 5,000 places in the Family Home Guarantee.
Let’s imagine that John is a first-time homebuyer from New South Wales, and he discovered a property that he would like to buy for $500,000. John has savings of $25,000 that he could make a deposit. Normally, he’d need to pay Lenders Mortgage Insurance (LMI) for a home mortgage with this low deposit, which would cost approximately $12,500. John chooses to use FHBG and gets approved for the home loan amount of $500,000 with a promise of just $25,000 (5 5 percent of the home’s value) due to the program. The result was that John could purchase his first home earlier than the time he could have had to do without the FHBG.
The FHBG is open to as many as 35,000 first-home buyers in a financial year. That means there are plenty of other people similar to John who can benefit from this program and reach their goal of becoming a homeowner.
- First Home Owner Grant:
This grant is a single payment that helps first-time buyers purchase or build their first residential home. While it can help in reducing some of the costs involved when buying a home, it cannot typically be utilized as a deposit. The amount of the grant varies based on the particular state or territory of the area where the property is situated, and some states offer up to $20,000. There are also different requirements for eligibility, however, generally speaking,
- You must be an Australian citizen or a permanent resident.
- Not previously owned a house in Australia.
- Is planning to reside in the house as the principal residence for a specific period.
First Home Loan Deposit Scheme:
The scheme was previously called The First Home Loan Deposit Scheme (FHLDS). The system allows first-time buyers to buy a home with a down payment of less than 5 percent. In the system, the Government will cover the remaining 15 percent of the deposit so that borrowers are able to avoid the expense of mortgage insurance by lenders (LMI). First-home buyers with a qualifying score must meet income and price limits, and the scheme is restricted to a specific amount of homes each year.
To be eligible to be eligible for FHLDS To be eligible for the FHLDS, you must
- You must be an Australian citizen or a permanent resident.
- You must be at the age of 18.
- Never owned any property outside of Australia.
- You must meet the income and property caps (which differ based on the property)
- Family Home Guarantee:
It was announced on July 1, 2021, that The Family Home Guarantee will provide eligible single parents and dependents those who have previously owned the property with a promise to buy a home with a down payment of only 2 percent. The Government will guarantee an amount of 18 percent or more in the property’s worth, which enables those who are borrowers to avoid LMI. The scheme is restricted to a specific amount of properties every financial year and includes a limit on purchase and income.
New Home Guarantee Scheme:
The New Home Guarantee (NHG) is a federal government initiative that offers eligible first-time home buyers a promise to build or purchase the home of their dreams with a minimum deposit of as little as 5% and without needing to be able to cover the Lender’s Mortgage Insurance (LMI). The scheme will cease to be open to new applicants from July 1, 20,22. The project started on January 1, 2020, and will continue until June 30, 20, and 22.
In the end, in conclusion, the Australian Government offers a range of programs to assist first-time buyers to enter the property market. Each scheme comes with its conditions for eligibility, such as limits on income and purchase prices and restrictions on the number of homes open each year. It’s essential to investigate each plan carefully to determine which one is right for you.
Contact us to help you and offer you answers to all questions as well as eligibility requirements in line with. The scheme typically limits the availability of homes on a first-come, first-served basis, with only a few lenders that are a part of the scheme. Our brokers are familiar with all systems and will help you make your dream home to life.
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