You’ve had the dream home in your head for years. Sure, the couch colour has changed a few times, the pool has got bigger, and you’re still teetering between kitchen styles but now the time has finally come and you’re ready to buy your very first home with a little help from our competitive interest rates and the possibility of utilising multiple government powered incentives.
Let’s explore what the main offers of assistance for First Homebuyers are and if they may be applicable / suited for you. The good news is you can apply for a variety of first home buyer assistance schemes and grants. There will be limitations as to what is available depending on your location and other eligibility requirements.
First Home Owner Grant (FHOG)
Target Market: First-time buyers or builders of new homes.
This grant is available to eligible First Home Buyers (FHB) across Australia, when you buy or build your first home.
For New South Wales, First Home Buyers can access up to $10k, whereas in Queensland the grant amount is $15-$30k depending in the time of the property purchase, and in Tasmania up to $30k can be accessed.
The eligibility criteria for a FHB also varies from state to state, so it’s important to check the finer details with your specific state legislation. Some common criteria are based off a FHB’s age, citizenship, if you haven’t previously owned a home and if the home is newly built.
For NSW you can understand more about the FHOG on the national website here.
First Home Super Saver Scheme (FHSS)
Target Market: Buyers who prefer to be tax-savvy.
This scheme allows First Home Buyers to make voluntary contributions of $15k per Financial Year to your superfund to save up to $50K, which you can later withdraw from your fund and use it for your deposit for a newly built or existing residential homes.
Certain eligibility criteria apply to this scheme, specifically for types of contributions that can be made, however, you do not need to be an Australian citizen or Australian resident for tax eligibility with this scheme.
This scheme is available Australia wide to any taxpayer making eligible Super contributions. Please note not all employers offer salary sacrifice, so please check with your workplace and your super fund.
You can understand more about the FHSS scheme on the ATO website here.
Help to Buy Scheme (2024)
Target Market: Key workers, single parents and victim-survivors of domestic abuse buying their first home.
The Help to Buy Scheme is available from 2024 for eligible First Home Buyers of a new or existing home. The scheme allows the to co-purchase a home with the government, where the overall equity is shared via a percentage split between the government and the homebuyer.
The scheme is different in each state where it’s available and has different splits of the share of equity. The splits are also different depending on if the home is a new build or an existing dwelling, so be sure to check on what your state offers.
Participating states are NSW and VIC.
You can understand more about the Help to Buy Scheme in NSW here.
You can understand more about the Help to Buy Scheme in VIC here.
First Home Buyer Assistance Scheme
Target Market: First Home Buyers
FHBs may be entitled to a concessional rate of stamp/transfer duty or even an exemption from paying it altogether under the First Home Buyers Assistance Scheme (FHBAS). Unlike the First Home Owner Grant (FHOG), the FHBAS applies to;
- buying an existing home,
- buying a new home and,
- vacant land on which you intend to build a home.
Certain criteria apply to this scheme and your eligibility for an exemption or concessional rate is determined by the value of the home. What is available per state varies, so check out your state legislation to investigate further.
You can understand more about the First Home here.
The Bank of Mum and Dad
As property prices rise faster than wage growth, many first-time homebuyers find it challenging to save up the necessary deposit. The Bank of Mum and Dad steps in to help bridge this gap. Let’s take a look at the benefits and potential pitfalls of this personal ‘scheme’.
Assistance Types:
- Cash Gifts: Parents may gift money directly to their children to use as part of their property purchase.
- Guarantees: Parents may guarantee a portion of their child’s home loan, allowing them to borrow more or secure a better interest rate against their equity.
- Lending: Some parents lend money to their children, which is then repaid over time.
Benefits for Buyers:
Entering the Market Sooner: With parental assistance, first-time buyers can accumulate the necessary deposit faster and enter the property market sooner.
Increased Purchasing Power: Parents’ financial support allows buyers to access higher Loan-to-Value Ratios (LVRs), enabling them to afford more expensive properties, or reducing their LVR due to having a higher deposit.
Lower Fees: Borrowers may enjoy lower fees over the life of the loan compared to dealing solely with a traditional bank. This can also help to offset extra costs such as Lender Mortgage Insurance “LMI” and Stamp Duty Tax.
Considerations for Lenders (Parents):
- Lending beyond their means can put their own financial stability at risk.
- Lending may impact pension eligibility, depending on the specific circumstances.
- Parents providing financial assistance should seek independent legal and financial advice to navigate potential tax implications.
While the Bank of Mum and Dad can be a lifeline for aspiring homeowners, clear communication, legal guidance, and realistic expectations are essential to avoid pitfalls and maintain strong family relationships.
Different states in Australia offer different FHB opportunities, as well as other concessions. Details on the FHB opportunities for each state can be found at https://www.firsthome.gov.au/
In part three of this series we will go through costs involved in buying your first home, this will help you calculate your budget and get you a step closer to buying that first home!
Southern Cross Credit Union Ltd 82 087 650 682 AFSL 241000 Australian Credit Licence 241000. Any advice is general advice only and does not take into account your objectives, financial position or needs (your ‘circumstances’).
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