First Home Owners Grant ACT
The First Home Owners Grant is funded by the Australian Government and administered by the various state and territory governments. This means there are some differences in the way it is managed in the different jurisdictions, although its basic thrust of granting a tax free, once only, lump sum payment of $7,000 to all eligible first home buyers remains the same throughout the country.
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- Interest Rate of 6.55%
- Comparison Rate of 6.55%
- Application Fee of $0
- Maximum LVR With LMI: 90%
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The main difference in its administration comes from the fact that the various state and territory governments supplement the grant with their own first home buyer incentive packages and use the eligibility criteria of the First Home Owners Grant as their own yardstick. The Grant administered by the Australian Capital Territory government is known as the First Home Owner Grant ACT.
In the ACT there are actually two quite distinct first home buyer incentive schemes that are offered to the first home buyer buying property in that jurisdiction. One is the First Home Owners Grant ACT and the other the Home Buyer Concession Scheme. The second scheme is a wholly ACT first home buyer initiative. Their different details are as follows:
The First Home Owners Grant ACT
The First Home Owners Grant ACT is the Australian Government funded program that was introduced to the first home buyer in the ACT for the first time on July 1, 2000. It was instigated as a compensation package to help first home buyers cope with the extra costs involved with the introduction of the Goods and Services Tax (GST) at the same time. It was a simple scheme that offered a tax free sum of $7,000 to all eligible first home buyers.
During the Global Financial Crisis (GFC) of 2008/9 the Australian Government used the First Home Owners Grant ACT to keep the housing industry from collapse. It increased the payment for people buying their first home, if it was an established home, to $14,000 and for those building their own home to $21,000. At the same time the Reserve Bank of Australia lowered interest rates to historically low levels. Both moves were a dramatic success and record numbers of first home buyers took up the offer. The result being that jobs in the industry were saved and the economy lifted. As economic matters got better the government discontinued the extra payment which was called the ‘boost’ payment, reverting the grant back to $7,000 once again and the RBA lifted interest rates to a more normal level in order to prevent inflationary trends from taking hold.
The Home Buyer Concession Scheme
The ACT Governments Home Buyer Concession Scheme offers generous concessions off Stamp Duty costs on all property being purchased with a value under $412,000. The minimum amount of stamp duty that is payable is just $20 on any property valued up to $330,000. From this figure to a home valued at $421,000 the home buyer has to pay a rate of $19.80 per $100 or part thereof.
These two packages together give a great relief to home buyers particularly first home buyers:
The First Home Owner Grant money can be used as you wish with most buyers using it to pay the costs associated with purchasing a home such as any set up costs, valuation fees, building and pest inspections. conveyancing and other legal costs etc. Some put it towards their deposit in order to gain more equity in the home and to help lower interest rates. However some lenders will not allow the grant to be used as a deposit as they prefer to see a pattern of regular savings built up over a long period of time. This indicates a certain financial discipline that tells them that the applicant would be a reliable and regular loan payment client worth of approval.
Since the GFC the ACT housing industry has not recovered as fast as other capital cities around Australia, although the signs are there that indicate that now would be a good time to invest, as house prices look ready to rise in 2011 and at this stage there doesn’t appear to be any interest rate increases planned.
Mortgage brokers can save you a lot of worry
Many first home buyers these days engage the services of mortgage brokers to advise them on all aspects of home buying. Applying for the First Home Owner Grant ACT is no exception. Mortgage brokers are able to assist you in completing the application form as well as making sure all the necessary supporting documentation is attached. If any aspect of the application is omitted or not explained properly the application will be returned un-processed and you will have to start from scratch again. Mortgage brokers can help you avoid such a backward step as their expertise is greatly valued by all in the industry.
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Related posts:
- Federal Government First Home Owners Grant
- First Home Owners Grant – Australian Capital Territory
- First Home Owners Grant New South Wales
- First Home Owners Grant (ACT)
- How to Apply for the First Home Owners Grant in South Australia (SA)
- First Home Owners Grant FAQ
- First Home Owners Grant – When Will The Grant Be Paid? (Vic)
- First Home Owners Grant FAQ NSW
- How to apply for first home owners grant
- When Will I Get the First Home Owners Grant?
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