During the second half of 2020, the government has introduced a number of measures aimed at helping young purchasers get their foot on the ladder. Now that many of the traditional barriers to market have been removed, there has never been a better opportunity to purchase your first home. We are experiencing that the first home buyers’ market is is the most active part of the market at the moment.
First Home Loan Scheme
The 2020 federal budget recently doubled the size of this scheme. Applicants are permitted to borrow up to 95% of their purchase price without having to pay lenders mortgage insurance. Lenders Mortgage Insurance is usually required if a borrower has a deposit smaller than 20%. It provides the your with security in the event you cannot repay your mortgage. It can be quite expensive depending on the size of the deposit and your lender’s loan terms and conditions.
Your bank will undertake their usual security and credit checks but you no longer have to save up to 20% of your purchase price as the government guarantees the performance of your loan obligations. This support runs for the duration of the loan.
There are eligibility caps and criteria. Firstly the scheme is restricted to individuals earning less than $125,000.00 or couples earning less than $200,000.00. Secondly, the purchase price of the property is limited to $700,000.00 for existing properties and $950,000.00 for new properties.
If you think you may be eligible, your banker or broker will assist you through the application for this scheme.
First Home Buyer Assistance Scheme
The First Home Buyers Assistance Scheme is applicable to prospective first home purchasers looking to buy an existing property, new home or vacant land. Under the scheme, purchases by first home buyers are either stamp duty free or a concessional rate is payable.
You will not have to pay stamp duty if you are purchasing a new home valued at $800,000.00 or less, an existing home for $650,000.00 or less, or a vacant block of land for $400,000.00 or less. Reduced rates of duty apply for purchases of new homes between $800,000.00 and $1m, existing homes valued between $650,000.00 and $800,000.00 and vacant land worth $400,000.00 to $500,000.00. The rate of duty payable is dependent on the purchase price of the property.
To be eligible, neither you or your partner can own, or have previously owned, property in Australia before. You must move into the property you are looking to buy within 12 months of purchase and live there for a period of at least six continuous months. If you are a member of the Australian Defence Force, the living requirements do not apply to you, provided you and everyone you are buying with are on the NSW electoral roll. There are further eligibility and requirement criteria which we can clarify for you.
Buying a new property or off the plan?
If you are purchasing off the plan or buying a new property, the First Home Owners Grant scheme is still running and the HomeBuilder scheme is also available. Eligibility criteria are applicable for both schemes, but if you meet the terms and conditions, you may be eligible to up to $35,000.00 in government grants to help with your new build. If you are buying off the plan, construction of your property must have started after 4 June 2020 to meet HomeBuilder scheme criteria. You may still be eligible for the $10,000 grant available through First Home New Home. Most importantly, the HomeBuilder scheme ends on 31 December 2020, so you must have entered into a construction contract by this date. Your contract must also provide for building works to start no later than 31 March 2021.
If you are looking to place an offer on a property, Contact us today. Alternatively, you can telephone us on (02) 4943 3988. Our experienced property lawyers will be able to step you through the conveyancing process. We have years of experience helping people with their conveyancing needs throughout the Newcastle, Lake Macquarie and Hunter region.