First Home Buyer Incentives
Saving for your first home is a long-term project. You may be eligible to benefit from a range of first home buyer incentives and stimulus schemes that could boost your savings and help you buy your first home sooner.
National incentives for first home buyers
First home buyer incentives were introduced by the Australian federal government to offset the impact of the Goods and Services Tax on home ownership.
- The First Home Owner Grant is a government contribution of $7000. This national first home buyer incentive scheme is funded and administered by the individual states and territories. Under the scheme eligible applicants receive a one-off tax-free grant to help with buying or building their first home.
- You must meet all of the eligibility requirements to qualify for the grant. The main eligibility criteria are: you must be an Australian citizen or a permanent resident of Australia, you must be buying or building your first home in Australia, and you must have the intention of living in the home as your primary residence within 12 months of settlement. If you are planning to purchase your first home with another person, you must both meet the eligibility requirements to receive the grant. Although the amount of the First Home Owner Grant – $7000 – is the same all over Australia, each state or territory has its own criteria for eligibility.
- First Home Saver accounts boost your savings for your first home. A combination of government contributions and tax concessions helps increase the savings in First Home Saver accounts. The government co-contribution is 17% for savings up to $5000 a year (that is, up to a maximum of $850per year), and tax on interest earned is at a rate of 15%. To encourage good long-term savings habits, the savings in First Home Saver accounts must be contributed over at least four financial years.
Some first home buyer stimulus schemes in Australian states and territories
There is a range of state- and territory-based grants, concessions and exemptions available to eligible first home buyers. Like the national First Home Owners Grant initiative, the incentives are designed to help buyers entering the property market for the first time. Some grants also specifically promote the purchase of newly constructed homes as a stimulus for the local building industry. The following examples show some of the benefits that are offered and limits that apply.
- First home buyers in Victoria may be eligible for a First Home Bonus. This bonus is for the purchase of properties valued at up to $600,000 and provides a grant of $2000 towards the purchase of an existing home. For newly constructed properties, the bonus is currently $11,000 in metro areas and $15,500 in regional areas (from 1 July 2010, the bonus will be $13,000 and $19,500 in metro and regional areas respectively). There is a property value threshold of $750,000; first home buyers of properties in Victoria above this threshold are not eligible for the federal First Home Owners Grant.
- The South Australian government offers a First Home Bonus to the value of $4000. To receive the full First Home Bonus, the value of the property must not exceed $400,000; the bonus is calculated on a sliding scale for properties valued between $400,000 and $450,000.
- A New Home Buyers Supplement of $3000 is available in New South Wales. First homebuyers may also quality for concessions on state mortgage and transfer duties. There is a property value threshold of $750,000; first home buyers of properties in New South Wales above this threshold do not qualify for the federal First Home Owners Grant or the state New Home Buyers Supplement.
The generous incentives for first home buyers could help you achieve your dream of home ownership. The few examples above show how the rules on eligibility are complex and subject to change. When planning to buy or build your first home it’s important that you have information that is up to date and relevant to your unique circumstances. To keep in touch with the latest information on first home buyer incentives and stimulus schemes, and how they affect you, Home Loan Finder is the perfect place to start your research.
Can I Use My First Home Owners Grant as a Deposit?
It is possible for you to use the $7,000 you receive under the First Home Owners Grant Scheme (FHOG) as part of the deposit to obtain your home loan, as the government does not stipulate how the money should be spent. That said however, most lenders would prefer to see a pattern of regular savings going back over several months, than a lump sum payment coming in at the last minute to make up the required amount. The reason being is that a lender wants proof of your financial discipline in being able to put a certain amount of money away each month before they will be willing to accept you as a reliable borrower. This means that most lenders would most likely not accept the FHOG money as part of the deposit they require.
The reasoning behind a lender’s policy on how the deposit money is collected is that if a potential borrower cannot save over a period of time for something so important as a deposit for a home, how can they be expected to repay the mortgage on a regular basis once the loan has been handed over? The FHOG is a tremendous financial help to a person when purchasing their first home but a deposit is more of a test of discipline than the actual amount that is put together. The FHOG money can be put to good use paying other associated costs involved in home purchasing such as an application fee, property inspections and in some cases government stamp duty. Some state and territory governments either waive the stamp duty impost on first home buyers or offer special concession rates.
Related posts:
- Eligibility for first home buyers grant
- Can you Afford a House Without Government Incentives?
- First Home Buyer Assistance from Government & Banks
- First Home Buyer Deposit
- First Home Buyer Extension
- First Home Buyer Savings Account
- First Home Buyer Rebate
- First Home Buyer Benefit
- First Home Owners Grant New South Wales
- Federal Government First Home Owners Grant
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