Grants, Schemes & Concession's
Make 2022 The Year You Start Your Journey As A First Home Buyer
Transcript of: Grants, Schemes & Concessions
Figuring out what you can actually qualify for when it comes to grants schemes and concessions, typically makes the other first homebuyers glaze over pretty much straightaway. Today, we’re going to dig deep into what’s out there. Let’s get into it
Hello, and welcome to the First Homeowner Concierge Podcast, where else our target is to get you into your first home. Now on to today’s topic!
First off, I’m really sorry if you’re not in Victoria, because today I’m just going to talk about what’s available here in Vic. The various grants, schemes, concessions vary from state to state. So it will just take forever for me to get over everything in the one podcast. If you need any help with with anything, if you you’re interstate, just let us know via direct message and we’ll be happy to help out where we can.
Now before we get deep into the reads, let’s just address all the different schemes that are available. So you’ve got an idea about what we’re going to go into from the start. There’s a few different ones, six that I can think of, which is your First Home Buyer stamp duty concession, your First Home Owner Grant, your First Home Loan Deposit Scheme, your New Home Grant, your First Home Super Saver Scheme, and your Homebuyer Fund. As you can see there is a never ending amount of things with confusing terms and also the abbreviations attached to them, which I haven’t gone into. And it’s super confusing.
First Home Owner Grant (FHOG) & First Home Buyer Stamp Duty Concession
With the FHLDS, we’ve already provided an update in the previous episode, so we weren’t talking about that too much today.
So let’s get into it. Let’s start with the First Homeowner Grant. I’m going to start with the First Home Owner Grant because it harks back all the way to the 2000. The year when all these First Homeowner Grants and scams and concessions really started kicking into overdrive. Those were the days, the Sydney Olympics, the only good Matrix movie. And old Johnny Howard introducing the First Homeowner Grant it was originally sold as a great scheme to get first homebuyers into the market. At that stage, we had rocky economic times, we were scared of the Y2K at the end of 1999. And then we had the .com bubble implode on us.
The FHOG was one of those initiatives that was meant to buy votes, the government’s got your back, that sort of thing. Anyway, fast forward 20 years, increase the house prices by three or 400%, Implement a myriad of different schemes to essentially do the same things. And you get to where we are right now, in 2022. The FHOG has changed a lot over the last 22 years. Let me just explain what it means now. If you’re buying something that’s new, or you’re building, then you can qualify if you’re a first-time buyer. If you’re a metro Melbourne, you get $10,000. And if you’re in the country, then you can actually qualify for a $20,000 grant. There are a few things you can encounter. But obviously, if it’s a standard purchase or build, you’ll be fine.
The next one I want to chat about is the First Home Buyer Stamp Duty Concession. This one is pretty basic. If you purchase under 600,000, then the stamp duty fees are not charged, when you’re buying just land. So you’re buying land and you’re going to build later on, it’s important to know that the stamp duty is only charged on the land value. This is a big lift up of homebuyers because stamp duty is about 5% if you’re paying before lot so from a minimum deposit of 5%. Normally, if you had to pay another 5% in stamp duty, you’re actually doubling the amount of the deposit you need.
New Home Grant & First Home Loan Deposit Scheme
The First Home Loan Deposit Scheme or FHLDS for short. We’ve talked about that in previous episodes along with the New Home Grant, I just want to touch on what the First Home Loan Deposit Scheme is because it kind of relates to another scheme that we’re going to chat about later on. And then I’m just going to touch on the New Home Grant and how it’s a little bit different but almost the same.
So the First Home Loan Deposit Scheme is a scheme that’s brought out by the federal government. And basically what they do is they go guarantor on your loan if you get a spot on the scheme, what this does is allow you to qualify for a loan much better but also helps you save in mortgage insurance, and your interest rate will probably be lower as well if you’ve got access to the scheme.
Now the thing with this scheme is I only put out 10,000 spots at once for established property. Again, if you want to learn more, go back to the last episode and have a listen it only for five or 10 minutes so it’s short, clear and concise. The New Home Grant is basically the same when I first bought out the First Home Loan Deposit Scheme. It wasn’t Just for established property, it was for established property and new homes, the government decided to change this and have a separate grant known as the New Home Grant, it operates almost the same as the FHLDS, they have just divided the two schemes between established property and new properties.
What’s important to know about the New Home Grant is actually when you purchase the land if the land is not titled, which means if the State Revenue Office hasn’t approved the actual block of land, then that may take quite a long time for the property to actually title. Why is this the problem? Because if you qualify for a spot on the New Home Grant, you’ve only got a particular period of time before that spot expires.
So that is the main takeaway, and you really need to be careful with how you’re doing these because you could get your spot on the grant, and then think you’re all hunky dory, go and buy something that you end up buying the wrong block of land that could be a real killer.
First Home Super Saver
The First Home Super Saver. What is the First Home Super Saver even I ask this question a year after it came out? Honestly, I’ve had no first-time buyers use this. That’s how rare it is. I’ve had a couple of potential customers that I’ve run into over the course actively using it. But it is pretty rare. So short for all these things have abbreviation this one’s abbreviation is FHSS. First Home Super Saver. Pretty standard. So it’s pretty self-explanatory.
When you think about it, you can make FHSS contributions using a salary sacrifice. That’s done through your employer. Basically, when you’re making a salary sacrifice, it means you’re putting that money away inside of your super so it can’t be touched. Unless you’re pulling that money out for the purpose of buying your first home.
The benefit here is that when you’re using salary sacrifice, you’re not paying tax on that money. So if you had to just let that money come out as wages and then put it away for your property, the government would take their income taxes, so you would actually be saving less. You can also make tax deductible super contributions yourself or non-concessional, which is after tax contributions as well.
The reason why I think no first home buyers have used this, and it’s come out in 2017. So we’ve had a good five years of, of this programme running is that it provides massive uncertainty, I think most people are confused by Sue, buy in the first place, and the main thing, first homebuyers come across is, well, if it’s stuck in Super, I can access it in case I need something.
So for example, if your car breaks down, or if you know, whatever happens, you might get sick or whatever you manage to go overseas to see family is a common one, you can actually access that money, the only way you can access it out of your super is if you are using it to purchase your first home. So I think that’s the major drawback. Otherwise, if you’re looking at it in theory, which is I’m sure how the government we’re trying to look at it when they created the fund. It works well.
Home Buyer Fund
The next one I want to talk about is the Home Buyer Fund. It’s another one that most of you won’t know, it actually was a scheme set up by the Victorian Government in which they contribute up to 25% of the purchase of your first home.
Now this was another one of those stimuluses from the pandemic schemes. It is very similar to the first home loan deposit scheme. And that’s why I mentioned that previously. Like all the other schemes, there are several qualifying factors to this, the main one being you need to have saved 5% of the purchase price for your deposit.
This is similar to the FHLDS, and if you qualify for both, you can actually only choose one of them. The benefit this has over the FHLDS is that once you go over the purchase price of 600,000 for an established property, then you have to start paying stamp duty on top of your 5% deposit. The higher you go the 600,000 the higher the stamp duty. For example, for a purchase of 650,000.
As a first home owner, you would have to fork out an additional $12,000 just to pay the stamp duty. The homebuyer fund therefore has an increased benefit if you want to go higher than 600,000. In other words, you have to save less deposit once you go over $600,000 price range.
The Three Takeaways!
If you’ve made it this far, honestly congratulations. Before we close this out, I’d like to leave you with three takeaways.
Number one, don’t worry about information overload. As I’ve said before, even this stuff is confusing for a veteran mortgage broker figure out this stuff as it changes very very often.
This leads me on to Takeaway number two. This stuff is too confusing to work out yourself. That’s why you need a good mortgage broker, as they will do the homework to see what you can possibly have access to, and help you through to settlement.
Takeaway number three, start at the earliest possible stage. Start before you think you’re ready because it may turn out that you can access or do something sooner than what you think. If you need help or have any questions, then please get in contact with us. Likewise, if you have feedback, do these podcasts as an educational series for my first home buyer clients, so all feedback will be welcome because it would help me improve my service to my clients. Again, if you made up with a home loan, or your first time buyer, please get in touch. Thanks for listening.
Thanks for listening to today’s episode of the First Homeowner Concierge Podcast. If you’ve got any questions or you would like to get into your own home, or you just want to stalk me online, you can search will Bell mortgage broker on either Google or Facebook.