Whilst we continue to hear that the dream of owning your first home is out of reach for many Australians we see that in a low interest rate environment and with various government assistance available for first home buyers the dream of your first home can be a reality. In this article we will look at the various assistance available to first home buyers.
First Home Owner Grant – Provided by Queensland State Government
The Queensland Government offers a $15,000 grant towards buying or building a NEW house, unit or townhouse. The grant is paid per new home and to be eligible you must satisfy the following criteria:
- Must be at least 18 years of age;
- Must be an Australian citizen or permanent resident (or applying with someone who is);
- You or your spouse must not have previously owned property in Australia that you lived in;
- You must be buying or building a brand new home;
- The value of the home (including land) is less than $750,000; and
- You must move into the new home as your principal place of residence within 1 year and live there continuously for at least 6 months.
First Home Super Saver Scheme (FHSS)
The FHSS was introduced by the Federal Government and it allows you to save money for your first home inside your superannuation fund. From 1 July 2017 you are able to make voluntary concessional (before-tax) and voluntary non-concessional (after-tax) along with associated earnings to help you purchase your first home. In order to be eligible you:
- Must be at least 18 years of age;
- Never have owned property in Australia;
- The property you are acquiring is located in Australia; and
- Previously not requested a release of funds from superannuation under this scheme.
You can apply to have up to a maximum of $15,000 of your voluntary contributions from any one financial year to be released under the scheme and up to a total of $30,000 across all years. In order to have the funds released you must apply for and receive a determination from the Australian Taxation Office to have the funds released and this needs to be done prior to signing of a contract for purchase of your home. You also need to check that your superannuation fund will release the money (note most funds allow money to be released for this purpose).
Federal Government – Mortgage Guarantee Scheme
The mortgage guarantee scheme (limited to a maximum of 10,000) first home buyers per year will commence in January 2020. The purpose of the scheme is to assist low and middle income earners (singles $125,000, couples $200,000 per annum) by offering loan guarantees so that purchasers do not have to pay lenders mortgage insurance on the acquisition of their first home where they do not have a sufficient deposit (normally 20% of the value of the home).
The scheme is being administered on a first come first served basis and in Queensland is limited to homes in capital cities and regional centres less than $475,000 and $400,000 in the rest of the State.
How much are Loan Repayments?
For those serious about buying their first home it is important to do your numbers and know what your expected loan repayments will be, detailed below is an estimation of expected loan repayments on a 30 year principal and interest loan where the expected home loan rate is 3.25%.
Loan Amount and Monthly Repayment
| Loan Amount | Monthly Repayment |
|---|---|
| $300,000 | $1,306 |
| $350,000 | $1,523 |
| $400,000 | $1,523 |
| $450,000 | $1,958 |
| $500,000 | $2,176 |
Whilst home ownership may seem unattainable by setting your own savings goals and using the assistance provided by State and Federal governments home ownership can be a reality and not a dream, so start saving.