It’s a new landscape for first time home owners so it’s worth taking a fresh look at the first home buyers grant and other government housing grants that are on the table. Suss it out with your mortgage broker to make the most of it!
There’s been a lot of upheaval in the housing market over the last 3 years. While some of it was predictable, the exact degree of extremes in forecasts always made it murky with the universe serving up some absolute shockers! A 2-year-long global pandemic, war in Europe, rocketing inflation and cost-of-living and general economic gloom – what a treat!
Does that mean first home buyers are hung out to dry? Absolutely not. There are a lot of new pathways being put on the table by the Federal and NSW Government, right alongside some long time trusty ones.
There have been some housing policies announced by the New South Wales Government recently with some big wins for certain demographics, but if you’re feeling left out – don’t be. There are plenty of watertight options to get your foot on the property ladder.
Some of these schemes, grants and assistance programs aren’t new, but it’s easy to forget them when a bunch of shiny new policies are being unveiled. When combined with the freshly unveiled schemes available to residents of NSW and hopeful mortgage holders nationally – things are looking up!
Let’s take a look at the new options, along with the not-to-be-ignored old faithfuls.
The New Kids on the block – First Home Buying Schemes rolled out post 2022 Federal Election
There’s a bunch of new government housing policies being announced at both a Federal and State Government level here in New South Wales.
Some have yet to be fully detailed, and some are guaranteed to go ahead. So what’s actually happening?
The NSW Shared Equity Scheme
Also known as the ‘Help to Buy Scheme’, there are 10 000 grants on offer from July 2022. If you’re a single parent, a single over 50 or a frontline worker then check your eligibility requirements. You might just be in for a win this 2022.
The First Home Buyer Choice
This scheme allows buyers to opt for paying an annual tax rather than the full cost of stamp duty upfront. Stamp Duty is a big cost barrier for first home owners and worth calculating on any intended purchases.
The Regional First Home Buyer Support Scheme
As promised during the 2022 Federal Election, the Labour Government is rolling out this scheme beginning in January 2023. Places will be limited to 35 000 for eligible applicants, who will be able to purchase a property with a minimum 5% deposit and the government guaranteeing up to 15% of the purchase price. This means these lucky buyers won’t have to pay Lenders Mortgage Insurance (LMI). However, these places will only be relevant to regions outside of metropolitan cities and have capped property values, along with other requirements.
Don’t overlook existing government housing grants – they are still powerful performers
There are quite a few other potential changes being discussed between Government officials and policy makers surrounding home ownership, housing security and giving the owner-occupier rate in Australia a boost.
So while we’ve looked at some of the most concrete new schemes announced, we can expect more relief to come over the next 24 months in the form of increasing eligibility and flexibility.
The best part of it all is that you might just be eligible for more than one scheme, and they might just boost your chances rather than cancel one another out. You’ll never know unless you talk to an expert!
The First Home Buyers Assistance Scheme
This scheme has been around the longest and it remains a pretty stable option to plan around. As at June 2022, the grant is $10 000 for first home buyers. The broadest of the schemes, this applies to buying an existing home, new home or vacant land which you intend to build your first home on – though the maximum value of the home varies depending on whether it’s existing or brand new.
The rules around first home funding eligibility are straightforward and in some cases can be combined with other schemes.
The First Home Owners Grant
If you’re building a new home then you can still access a $1000 grant. However, the eligibility requirements differ slightly between buying a complete new home, and building a new home.
Brand new houses, apartments or similar dwellings cannot exceed $600 000. For brand new builds the threshold is higher at $750 000 – but you must be able to demonstrate a total price inclusive of land costs, home building contract and building variation costs to be eligible.
The First Home Guarantee
From July 2022 the places for this NSW housing scheme – previously known as the First Home Loan Deposit Scheme – will be lifted to 35 000 places, applicable to both eligible single income earners and couples seeking to buy for the first time.
Those who nab a spot can purchase an existing property or new home with a minimum 5% saved deposit and a wavier on LMI with The First Home Guarantee scheme.
If you’re looking to maximise your chances of qualifying for it, don’t hold off making an appointment with a cluey mortgage broker like Newy Finance!
The Family Home Guarantee
This grant applies to single parents with at least one dependant child – natural or adoptive – and spots have been increased to 15 000 as of July 2022. Eligible applicants can purchase a home with a deposit of just 2% without paying LMI, with the government paying the rest.
The biggest difference to some other programs available is that it doesn’t matter if applicants have previously owned a home. As long as applicants don’t currently own a property and meet the requirements they can apply for a place in the scheme.
This is great news for single parents doing it tough out there, and Newy Finance has helped clients get a place in this scheme since it first rolled out in 2021.
The First Home Super Saver Scheme
One of the most overlooked but arguably most valuable schemes – if you’re super committed (ha-ha!) – is the First Home Super Saver Scheme. This scheme allows you to make voluntary contributions to your superannuation that you can withdraw at a later date for the purpose of buying a first home.
You can contribute a maximum amount of $15 000 per year for this purpose, which assists most people with achieving a deposit on a typical Australian house within 3-5 years.
Extra exciting? From July 2022, those using this scheme will be eligible to withdraw a maximum of $50 000 from their superannuation for a first home deposit, provided they have contributed at least $50 000 to their superannuation voluntarily (on top of employer contributions).
Most people make voluntary contributions to their superannuation through salary sacrifice. You can make voluntary contributions to your superannuation at any time, but pre-tax salary sacrificing gives you the best bang-for-buck:
- You have a regular savings record without withdrawals – banks love it!
- Your pre-tax contributions lower your taxable income, meaning your take-home pay won’t be as light as if you simply deposited that amount into a normal savings account.
- Your voluntary contributions boost your total superannuation balance while they’re sitting there, which boosts your earned interest and superannuation growth
- Your voluntary contributions are taxed upon withdrawal at a much lower tax-rate, less 30% of your marginal tax rate. This means average income earners are taxed just 2.5% on withdrawals, instead of the 32.5% tax they would normally pay on earned income.
The biggest risk to this strategy? You can only withdraw it for the purpose of buying your first home. So if you change your plans, you have to be content with being just a little cosier in your retirement!
Fast and sure – As the world changes, so must mortgage brokers
While there are some truly exciting housing policy announcements happening in 2022 and we hope to look forward to many more, there are already some exceptionally solid options on the table. All this means is that there are a few more flexible combinations we savvy mortgage brokers can put together to do what we love best – help people.
Ultimately mortgage broking is about helping people achieve the financial and emotional security goals that they work hard for. Sometimes this can be in really difficult economic climates and sometimes it seems like its raining opportunities.
Let’s be honest though, a great mortgage broker gets results for their clients regardless of the drama of the day. Solid strategies and taking advantage of available schemes or grants – and let’s add a dash of good financial planning – wins out every time.
If you’re feeling overwhelmed or full of excitement – we don’t blame you, it’s a lot to take in. So why leave it to chance?
Set up a time to sort it all out and get a clever plan in place by calling Jon at Newy Finance or submit an enquiry to look at all the options available for you. It’s never too late to work towards the owning the home you want.