Level Up with $55K Towards Your First Home

This blog was completed and to be published ‘PC’ – that’s Pre-Covid19. The start of 2020 has been devastating for us Aussies to say the least with the bushfires, floods and then just as we started to recover from that – a global pandemic grinds us all to a halt. 

As we come out of the fog with restrictions starting to lift and the streets showing signs of life again, our nation’s focus now shifts on ensuring Australia’s economy stays afloat. Enter the recent government implementation of the Home Builder scheme.  

You read the title correctly – up to a whopping $55,000 is available for those who meet the criteria, to put towards building a new home. This is made up of the original $15,000 First Home Owners (FHO) Grant PLUS the post covid-19 Home Builder $25,000 grant PLUS free stamp duty. So what do you need to know about the Home Builder? Let’s dive right in.

Home Builders Grant – $25k

Do you qualify?

To access the Home Builder $25,000 grant you must:

  • Apply for the grant before 31 December 2020.
  • Be an Australian citizen.
  • Earn less than $125,000 a year as an individual or $200,000 as a couple (gross income). 
  • Be building a new property that you will live in as your home. This includes buying detached houses off the plan (i.e. townhouses).
  • Ensure house plus land total value is not more than $750,000.
  • Begin construction of the new home within 3 months of the building contract date.
  • Have the property built under your name and not a company or trust.

Is the Home Builder only for First Home Buyers?

Nope. Anyone who meets the above criteria can apply for the Home Builder scheme as long as you are going to live in the new home and it is not for an investment property. And yes, you can apply for both the FHO grant and the Home Builder combined. 

Hot Tip: Make sure you get your income assessment right to mitigate the risk of having to repay the $25,000 grant. The income cap will be based on your most recent year and this could be audited. 

It’s a win/win.

If you were lucky enough to be in a position to buy a new home ‘Pre-Covid’ and maintain your employment throughout – the time is most definitely now.

Whilst to some it might seem insensitive to be excited about a scheme that was put into place as a result of a global pandemic – it’s important for all of us to celebrate our wins now more than ever.

It is equally important to know that this scheme has been put in place to support over a million workers in the building industry over the next 9 months. This is a critical time in our lives, and at the risk of sounding dramatic – history itself – for those who can, should stimulate the economy. 

It’s a win-win.

Free Stamp Duty – $15K

Stamp Duty will be waived for First Home Buyers where property prices are under $500,000 as long as the property will also be your primary residence after purchasing for at least 12 consecutive months. Other requirements include:

  • No previous ownership of residential land/property including part ownership.
  • Be paying market value if the vacant land is valued between $320,001 and $399,999.
  • Must be over 18 years of age.
  • Are an Australian permanent resident or Australian citizen.

Stamp duty applies for properties over a total value of $500,000 but at a reduced rate with a maximum entitlement of $8,750. The concession is calculated just before settlement by your solicitor or conveyancer. Make sure you keep up to date with concessions at the Queensland Government First Home Concessions page or here for a breakdown on rebates and links to forms.

First Home Owners Grant – $15k

For most of us, our first home will be the biggest financial decision of our lives, both in terms of the size of the debt and length of the loan. It’s a commitment that has the potential to make our dreams come true or put us on the path to bankruptcy. This can be daunting, exciting, scary, uplifting… So, getting off to a good start is paramount. Luckily in Queensland, we have the First Home Owners’ Grant to lighten the load, but what is it? How does it work? Can anyone get it?

Here are 10 steps to answering the most pertinent questions that will help you have a clearer understanding of the First Home Owners’ Grant and a few Hot Tips to boot!

1. Let’s start by looking at the three main checkpoints to see if you are eligible:

  • You must be an Australian citizen or a permanent resident. However, if your partner is either of these, you can still qualify. 
  • You must be at least 18 years of age and an individual – companies or trustees are not eligible.
  • You must be buying or building a brand new home. A house, unit or townhouse are all accepted as “homes” but they must not have been lived in by you or anybody else prior. 

Hot Tip: if you do prefer to buy an established property, you can still be eligible but substantial renovations need to be made. In this case, structural features need to be replaced or completely removed. A simple kitchen and bathroom upgrade will not suffice.

2. Over the years, the FHOG has varied widely in its principal amount, today in 2020, it is $15,000. Unfortunately, it dropped in June of 2018 by $5,000, but it’s still better than most other Australian states. The amount is reviewed every 12 months, so make sure you recheck it close to the time of making the final decision. 

3. Despite the name, having previously owned property is not always a deal-breaker. If you never lived in your previous property and it was therefore considered an investment property, you are still in the race. 

4. The total value of the property must be less than $750,000. That includes the cost of land, house and any upgrades you might make before settlement. 

Hot Tip: If your chosen property is over that amount, you might consider postponing extra features or upgrades till further down the track to keep the price within the limit.

5. Your home must be your principal place of residence for at least 6 continuous months during the first 12 months of ownership. 

Hot Tip: Once you have lived in it for 6 months, you are free to rent out the entire property or single rooms within it -which is not a bad way to help pay the mortgage.

6. The date of payment will vary depending on what type of purchase you make. The three options are: If you buy a new home, the payment will come in on the date of settlement. If you are building, the date of first progress payment will be used. Finally, if you are an owner-builder, the payment will be made after receiving the final inspection certificate.

To consider: As you can see there could be a big difference in when the $15,000 actually hits your account. If it’s important to you to receive the Grant payment sooner rather than later take these factors into account.

7. One of the most arduous tasks in buying your first home is saving for the deposit. So, can the FHOG be used as part of the deposit? The answer is maybe. There are lenders that will count it towards the deposit and others that won’t. This may be one of the first questions to ask your lender. 

To consider: If you do find a lender that will count the Grant towards the deposit, then your saving time has been greatly reduced. If the home in mind costs $500,000 and the lender asks for a 10% deposit, then you only need a further $35,000 to be in the game.

8. Queensland also has a Stamp Duty Concession (SDC) that you can combine with your FHOG and drive the overall cost even lower. In order to be eligible for the complete exemption, you need to live in your new home for 12 months (not just 6) and the value of the home must not exceed $500,000. However, a smaller Stamp Duty discount can still apply if the value of the home does not surpass $550,000. 

To consider: If you do stay within the half a million limit you will get the benefits from the FHOG and the SDC. Double the savings!

9. If you made it this far then it might be time for an eligibility test.

10. You got the green light from the calculator and you found a property you want to turn into your first home? Then it’s time to have a look at the application form. Download the form.

Hot Tip: It’s only 15 pages, but if that seems like a lot of work, then think of it this way, for every page you fill out you will be paid $1,000. Not a bad gig if you ask me! 

Buying your home is an important milestone for most of us. Certainly owning your small piece of Australia has a nice ring to it and hopefully, this blog made that goal seem a little more within reach. To take the next step you might consider contacting a mortgage broker to look at your individual case in more detail. Most brokers will be well versed and up-to-date with the ins and outs of the Grant, plus they can analyze your financial capacity and find a lender that looks at your situation most favourably. Another option is to contact the offices of state revenue and cross-check all the advice you have received. This link will take you straight to them.

Linzen Real Estate can help you answer any questions and guide you through the process.

*Disclaimer – All this information is general in nature and each state has its own version of the Grant with varying details. This blog concentrates on Queensland, the Sunshine State because life is better up here.

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