First home buyers FAQS
The First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative to support eligible first home buyers to purchase their first home sooner. The First Home Loan Deposit Scheme will be available for 10,000 first home buyers.
In most cases, First Home Buyers with less than a 20% deposit need to pay LMI, however, under the FHLDS, the home loan is guaranteed by the government hence you the borrower does not need to pay the LMI. This allows for the first home buyer to purchase their first home much sooner with little as a 5% deposit required.
To qualify for the FHLDS;
– You must be 18 years of age.
– An Australian citizen at the time you enter the loan.
– Earning up to $125,000 for individuals or $200,000 for couples.
– Must intend to be owner occupiers of the property.
– Apply as an individual or couple.
– Must be first home buyers.
If you’re a first home owner you will not have to pay stamp duty if your property is valued at less than $600,000. First home buyers who purchase property valued between $600,000 and $750,000 also receive a concessional rate of stamp duty. You could also be eligible for a concessional rate if you’re buying vacant land to build your home. To calculate your stamp duty please see the following link – https://www.sro.vic.gov.au/calculators/land-transfer-calculator
To qualify for the FHOG;
– You must be 18 years old at the time of settlement.
– You must be an Australian citizen or permanent resident.
– Must occupy the residence for 12 months after settlement.
– Must be a new house or a house that’s being sold for the first time.
– The house must be valued at $750,000 or less.
To apply for the First Home Owners Grant, you will need the following documents. First of all, you will need to complete the application form along with a copy of the contract to purchase your new home. If you’re an Australian citizen you will then need the following identification documentation;
– Australian birth certificate, Australian citizenship certificate or an Australian passport.
– Any supporting documents in regard to marriage or change of name.
If you’re not an Australian citizen, you will need to provide a current passport and proof of residency.
All documentation must be certified as a true copy of an original document by an authorised person such as police office, solicitor, or justice of the peace.
The most efficient way to receive payment of the FHOG is to apply through the broker. A good mortgage broker will apply on your behalf through the bank. The $10,000 grant can be used as part of the deposit for your home loan, this allows the buyer to potentially save $10,000 on their deposit and speed up the process of obtaining a home loan.
The New Home Guarantee is an extension of the First Home Loan Deposit Scheme (FHDLS), with an additional 10,000 places available. Under the New Home Guarantee, the following are considered eligible properties, newly-constructed dwellings, off-the-plan dwellings, house and land packages and land and a separate contract to build a new home.
This scheme is best suited to buyers who already have already purchased their property or will be ready to settle within 1-2 months. This is due to the timeframe placed on this scheme, for all types of eligible properties, a contract of sale and/or an eligible building contract must be entered into prior to the expiry of the 90 day pre-approval period.
The Family Home Guarantee was put in place to assist eligible single parents with a minimum of at least one dependent child in purchasing a home. The Family Home Guarantee is available from July 1st 2021 – 30th June 2025. In most cases, home buyers with less than 20% deposit will have to pay LMI, however, from participating lenders single parents will be able to purchase their home sooner with a deposit as little as 2%. This is because part of home loan will be guaranteed by the NHFIC. For a single parent to be eligible under this scheme, the must be able to prove that they are legally responsible of the child. For a property to be eligible under the Family Home Guarantee, it must be a residential property, such as a townhouse, apartment, unit or house.
A finance clause is included in the purchase of a new home, it gives the buyer time to have their finance approved by the lender. The finance clause protects the buyer if their finance is not approved and allows them to pull out of the contract. The finance clause works off a timeframe, which is generally 14-21 days from the date of contract. If the buyers finance is not approved within this timeframe than there are two options available, to request an extension or to continue unconditionally. There are risks with continuing unconditionally, you will need to speak to your mortgage broker or conveyancer to find out more.
If the buyer has not get home loan approval by the required date than they can request an extension from the vendor. If the vendor decides to decline the request then the buyer can back out of the contract without incurring penalties.
The buyer can also back out if the home loan application is declined.
When purchasing a property, you should always complete your own property inspections first in order to gauge whether the property is up to your standards. However, having professional building and pest inspectors inspect your home is greatly beneficial. These are the experts in their field, they will come back to you straight away if you have any problems within the property. This can save you thousands of dollars in potential damages later down the track if you purchase a home without inspection.
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