Australian home buyers might have found their borrowing capacities have reduced with increased home loan interest rates, which ultimately reduces how much they can buy a home for. With the residential property market starting to slow throughout most capital cities, it has become evident that reduced borrowings are starting to impact the market.
The Home Guarantee Scheme initiatives on offer from the Australia Government have become extremely beneficial to those eligible. The guarantees essentially eliminate the need for Lender’s Mortgage Insurance, which results in more of your loan funds and deposit going toward the actual funds required to purchase a home. This can result in you getting into the market sooner, with a less of a deposit required than what has previously been the case. This can also lead to cheaper lending products on offer, with Loan to Value Ratios reduced due in part to the additional security offered by the guarantees.
First Home Guarantee
The ‘First Home Loan Deposit Scheme’ has been amended and renamed as the ‘First Home Guarantee’. The original scheme was an incredibly successful program offered by the Federal Government to assist first home buyers purchase a new or existing home with a 5% deposit and without having to pay expensive Lenders Mortgage Insurance.
There are now up to 35,000 places offered each Financial Year, for those eligible first home buyers eager to get into home ownership. The main eligibility requirements state that home buyers 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 couples, 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
- Check out the price caps here
Like the previous scheme, it’s expected that demand will be high.
Click here for more information
Regional First Home Buyer Guarantee
The Regional First Home Buyer Guarantee is essentially the same as the First Home Guarantee, but for those first home buyers looking to buy in Regional areas. First home buyers can purchase a new or existing home with a 5% deposit and without having to pay Lenders Mortgage Insurance.
There are 10,000 places offered each Financial Year, for those eligible first home buyers looking to buy in Regional Australia. The main eligibility requirements state that regional first home buyers 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 couples, 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
- home buyers (or at least one borrower when applying as a couple) must have lived in the regional area or adjacent regional area they are purchasing in for the preceding 12-month period to the date they execute the home loan agreement (also called the Home Loan Date)*
- Check out the price caps here
Click here for more information
Family Home Guarantee
The Family Home Guarantee is to help single parents onto the property ladder and achieve home ownership.
The assistance means that an eligible borrower will be able to purchase a new or established home with only a 2% deposit based on the purchase price. The Federal Government will step in to provide a guarantee for the remaining 18% of the deposit. There are specific price caps for each state which you can view here. The government has allowed for 5,000 places to be made available to eligible participants over a four-year period.
This package will provide a much-needed boost to many single parents who may be doing it tough and cannot afford to save a traditional deposit to purchase a home.
Of course, there are various income and eligibility requirements that home buyers must meet:
- applying as an individual
- a single parent with at least one dependent child (see Single Parent Definition below)
- an Australian citizen at the time they enter the loan
- at least 18 years of age
- be earning no more than $125,000 per year
- intending to be owner-occupier of the purchased property
- DO NOT currently own property (see Previous Home Ownership Definition below)
Single Parent Definition: To apply for the FHG, home buyers must:
- be single. A person is considered single if they don’t have a spouse and/or a de facto partner. Note: a person who is separated but not divorced is not considered single
- have at least one dependent child. To have a dependent child, you must be the natural or adoptive parent of the child and the child must either be
- a “dependent child” within the meaning of subsections (2), (3), (4), (5), (6) and (7) of section 5 of the Social Security Act 1991 or
- at least 16 but under 22 years of age, receive a disability support pension within the meaning of the *Social Security Act 1991 and live with you
*For the purposes of the Social Security Act 1991, you must show that you are legally responsible (whether alone or jointly with another person) for the day-to-day care, welfare and development of the dependent child and the dependent child is in your care.
Previous Home Ownership Definition: FHG applicants can be either first home buyers or previous owners who do not currently own a home. To be eligible, you must not currently have:
- a freehold interest in real property in Australia
- a lease of land in Australia
- a company title interest in land in Australia
Click here for more information
Other Government Specific Home Buyer Incentives
Each State Government has specific incentives available to assist first home buyers with entering the market sooner. These incentives come in a variety of different forms depending on which State you are hoping to purchase in, with offers such as cash Grants & Stamp Duty concessions available. You can check out what’s available in each state here.
As we are based in SA, we have a wealth of experience assisting first home buyers with SA’s $15K First Home Owners Grant – Click here for more information.
We also have experience with advising Australians on how to properly use the Australian Government’s First Home Super Saver Scheme – Click here for more information.
A Bernie Lewis Home Loans Mortgage Broker isn’t confined to home buyers in SA exclusively and can also assist those looking for support to purchase in other States.
Lender Specific Incentives
With a variety of lenders on our panel there are wide ranging offers to assist First Home Buyers or specialist professionals with purchasing owner-occupied property.
Lender Cash Gifts: For first home buyers, currently there are additional First Home Buyer cash gifts for up to $5,000 to assist with buying owner-occupied property.
Lenders Mortgage Insurance Discounts: First Home Buyers may also be eligible for reduced Lenders Mortgage Insurance Premiums with some lenders offering significant discounts for those eligible. There are also a range of product discounts and Lenders Mortgage Insurance discounts for specific industry professionals on offer from a wide range of lenders. The most common industries to receive these specials are medical and other high income earning professionals such as solicitors, but please have a chat to one of our Mortgage Brokers to see if you are eligible.
HomeStart: HomeStart offer several supporting products to assist South Australians with owner-occupied purchases. From the Advantage Loan to the Starter Loan, there are a range of products to help home buyers get their foot in the door. See here for more information.
Every purchase situation is unique to the buyer so it’s always best to have a Bernie Lewis Home Loans Mortgage Broker guide you through the grants and incentives on offer, giving you the best chance of securing your dream home.
Call us now on 8300 8300 or email us info@bernielewis.com.au.
