Use The New Homebuyers Grant – It’s The Best Time To Buy A House!

It’s tricky when you’re first in the market to purchase a home to understand when is the best time to buy a house. If you’re buying for the first time, throwing in the First Home Buyers Grant, the property search, legals and all the info that goes with it can leave you with a head full of information and no idea of where to start.

If you’re interested in finding out more about how you can use the first home buyers grant to your advantage as you step into your first home, or you are at a cross road as to when is the best time to buy a house, we’ve put together the basic info to help give you some clear information to get you on your way towards your new home.

How does the homebuyers grant work?

The First Home Buyers Grant or First Home Owners Grant (FHOG) was introduced over 20 years ago in 2000 to help first home buyers get into the housing market. The grant is a one-off payment for first home buyers that are eligible to build or buy a home to live in.

The FHOG is a national scheme, and each state and territory has their own eligibility requirements and grant amounts, so to find out more regarding the grant amount and finer details it is a great idea to get in touch with your state scheme to get the full rundown.

As well as the home buyers grants, the new Home Builders grant announced by the Federal Government recently offers additional benefits for those looking to build their own home. The Home Builder scheme offers an additional $25,000 grant for new home builds and renovations from June 2020. To view all the information and eligibility click here.

Why is now a good time to buy a house with the new homebuyers grant?

If you are in two minds about whether or not now is a good time to buy a house with the new homebuyers grant, consider the benefits of being able to use the First Home Owners Grant and the Home Builders grant of $25,000 to create your dream new home.

With the first home owners grant varying based on the state or territory from $7,000 to $20,000 based on the state, the combination of buying a house and also adding in the Home Builders grant if you meet eligibility and are building a new property or renovating is a huge windfall for individuals entering the property market for the first time. View the state-by-state guide for the First Home Owners Grant here.

Combining your state’s First Home Owner Grant, stamp duty concessions, and the Home Builders grant for those looking to build is a unique opportunity to get ahead in the property market.

If you’re in the market to get the most bang for your buck for your first home purchase, now it a great time to buy your new home or build a new home with the First Home Owners Grant.

If you would like to find out more about the best time to buy a house or how to use the first home owners grant to get into your new home, get in touch with Achieve Homes to explore house and land packages and arrange your pre-qualification for the grant. To find out more, explore our house and land packages, display homes and new houses in suburbs across Melbourne and Canberra or check out testimonials from some of our happy customers.

First Home Owner Grant: What You Need to Know

Are you a first-time home buyer that’s finding the First Home Owner Grant all very confusing? You’re not alone. We’ve answered the most important questions you’re probably asking yourself about the grant, to help make life a little easier while you search for your new home:

The First Home Owner Grant was introduced in 2000 as a way to offset the effects of GST on home ownership for people who are purchasing their first home. It is a national scheme which is funded by the individual states and territories and administered under their own legislation.

Are you eligible for the First Home Owner Grant?

To qualify for a First Home Owner Grant in the ACT or NSW you must meet the following criteria:

  • Each applicant is a natural person and not a company or trust.
  • At least one applicant is a permanent resident or Australian citizen.
  • Each applicant must be at least 18 years of age.
  • All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with another person, in any State or Territory of Australia before July 2000.
  • All applicants and/or their spouse/de facto have not previously owned a residential property jointly, separately or with another person in any State or Territory of Australia, and occupied that property for a continuous period of at least six months.
  • This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory (unless subsequently repaid).

What makes a property eligible?

The First Home Owner Grant applies to new or substantially renovated properties with a value of less than $750,000. A new or substantially renovated property is:

  • a home that has not been previously occupied or sold as a place of residence; or
  • a substantially renovated home that, as renovated, has not been previously occupied or sold as a place of residence; or
  • a property which is subject to an “off the plan” purchase agreement.

The home must not have been previously occupied or sold as a place of residence. For a renovation to be considered as ‘substantial’, they must have affected most of the rooms in the building.

Further requirements to be met:

New home: The home must be complete and ready for occupation at the time of the application for the grant.

Off the plan purchase: The land must be intended for the site of a new home and must be built before completion of the agreement.

Vacant land purchase: Foundations of the property must be layed within 26 weeks of completion of the purchase, however there is no limit on the time of construction. Agreement or transfer of vacant land must be for the whole of the land. If the land is a parcel of land where two or more homes are to be built, the agreement or transfer must be for that part of the land which has exclusive occupancy.

Once all these criteria are met, the owner must live in the new home for at least 6 months. If you move out before 6 months the grant must be repaid.

How much is the grant?

ACT: As announced in the 2015-16 budget, the FHOG was reduced to $7,000 tax free for grants on or after January 1st 2017.

NSW: The FHOG in NSW offers a $10,000 tax free grant for homes that meet all criteria.

Are stamp duty concessions available?

Yes, in the ACT for properties under $468,000 you can expect to only pay $20, and for properties up to $590,000 you’ll be paying $14.70 for each $100 over $468,000.

For amounts in NSW, click here.

Does your income affect your eligibility for the grant?

No, the grant is not affected by your income, however it does affect your concessional duty amounts.

Saving for your first home? Here’s what to consider

So, you’ve decided you’d like to own your first home. Navigating the buying process can be daunting at first and without some guidance, it can result in some hefty outlays that you didn’t account for!

We take a look at some of the important financial components to consider when saving, to ensure all bases are covered when the time comes to make the big purchase.

Borrowing Power

It’s a good idea to know how much a bank is willing to lend you, which is known as your ‘borrowing power’. This amount is worked out based on your current financial position including your salary, savings, expenses, assets and debts (such as credit cards, higher education, personal loans, etc.).

Most banks have an online calculator to give you an estimate on your borrowing power, but it’s wise to speak with either a mortgage broker or a representative at your preferred bank to assess your individual circumstances in depth.

Deposit

Once you’re aware of your borrowing power, you can research the property market to identify what’s within your budget. The largest sum of money you will need to have saved up is your deposit.

Whilst some lenders will allow you to borrow over 80% of the property’s value, it’s important to keep in mind that in this scenario, you will either need to have a guarantor or pay Lender’s Mortgage Insurance (LMI). LMI is a fee applied directly to your mortgage by the lender for added financial security, as you’d be borrowing a higher amount. This figure is calculated as a percentage of the borrowed amount and applied to your mortgage annually.

Real estate agent opening front door of property to conduct property valuation

Valuation Fees

Property valuation is the process of engaging someone to give a formal opinion on the market value of a property, based on recent sales in the area, size and market rent. This is then used to formulate the property’s worth, and therefore how much you will need to borrow to purchase it.

Grants & Concessions

If you’re a first home buyer in the ACT, you should check your eligibility to receive the First Home Owner Grant (FHOG) by visiting ACT Revenue Office’s page. If you’re a first home buyer in NSW, visit the NSW Government’s Revenue page to check your eligibility.

These grants are aimed at providing financial assistance to eligible people buying their first home, and can save you thousands of dollars on fees such as Stamp Duty.

Mortgage application with red approved stamp, keys to new home beside it

Stamp Duty

Stamp Duty is a compulsory tax imposed on home loans (as well as other acquisitions), and is worked out as a percentage of the value of your property. That means, the more expensive your home is, the more you’ll pay in Stamp Duty.

It’s important to be aware of exactly how much this will be and whether you’re entitled to any grants or concessions as outlined above, as the full amount must be paid within 30 days of settlement if you are required to pay it.

Legal & Conveyancing Fees

Buying property requires a lot of legal paperwork that must be formally acknowledged and signed. Conveyancing is the area of law that handles this part of the process, which involves the official transferral of property from one owner to another, in accordance with Australian legislation.

To ensure you fully understand your contractual obligations, a solicitor specialising in this field or conveyancer should be engaged. They will be able to highlight any conditions that you should be aware of and ensure you understand what your contract outlines. Conveyancing fees can vary so do shop around, but you should be prepared to budget approximately $1000 for this component.

Young family of four unpacking boxes in their new home

Settling In

If you’re purchasing a home you plan to live in, the settling in costs can add up quickly and take you by surprise! Be sure to consider all aspects of moving in, from packing materials such as boxes and packing tape, professional removalists, end of lease clean (if you’re coming from a rental property), new furniture and setting up your utilities at your new home.

Buying property is an exciting decision but one that should be researched thoroughly. Whilst we have aimed to cover some of the main financial components of buying property; every person’s situation is unique, so it’s important to do your own research and speak to a financial expert to assess your situation before making any decisions.