How another 10,000 first time buyers can soon snap up their dream home with a tiny deposit – so are you eligible?
Another 10,000 first home buyers can soon snap up their dream home with a tiny deposit, thanks to the expansion of a government scheme.
The First Home Loan Deposit Scheme will be available from budget night next Tuesday to June 30 next year.
The measure allows first home buyers to obtain a loan for a new or newly built home with a deposit of as little as five per cent, with the government guaranteeing up to 15 per cent of the loan.
The scheme has already helped close to 20,000 first home buyers.
There are several checks the government uses to determine eligibility, including an income test, a prior property ownership test, a minimum age test, a deposit requirement and an owner-occupier requirement.
Another 10,000 first home buyers can soon snap up their dream home with a tiny deposit (stock image)
ARE YOU ELIGIBLE?
Income test
Singles – your taxable income for the previous financial year must not be more than $125,000.
Couples – your combined taxable income for the previous financial year must not be more than $200,000.
The income test is assessed by your lender.
Prior property ownership test
The prior ownership test requires you to not have ever owned:
- A freehold interest in real property in Australia
- An interest in a lease of land in Australia with a term of 50 years (or more)
- Or a company title interest in land in Australia.
Citizenship test
The Scheme is only open to current Australian citizens.
Minimum age test
The Scheme is only open to persons that are 18 years of age or over.
Deposit requirement
The Scheme is to assist singles and couples who have at least five per cent of the value of an eligible property saved as a deposit.
The five per cent must be made up of genuine savings.
If you have 20 per cent or more saved, then your home loan will not be covered by the Scheme.
Owner-occupier requirement
Investment properties are not supported by the Scheme.
To meet the owner-occupier requirement, you will need to:
- Move into the property within six months from the date of settlement or, if later, the date an occupancy certificate is issued
- Continue to live in that property for so long as your home loan has a guarantee under the Scheme
Recipients must be Australian citizens, over 18 years old and be willing to move into the property within six months from the date of settlement.
They must get their income assessed by a lender and prove they have not ever owned a 'freehold interest in real property in Australia'.
'You need to satisfy all these checks to qualify for the Scheme,' the government website reads.
'If you don't meet the requirements for one or more of these checks, or have questions about any of these matters, you should ask your lender and/or seek appropriate advice.'
Treasurer Josh Frydenberg said the loan deposits could be used in conjunction with HomeBuilder, which provides grants of $25,000 for new homes and major renovations.
'Helping another 10,000 first home buyers to buy a new home through our First Home Loan Deposit Scheme will help to support all our tradies right through the supply chain including painters, builders, plumbers and electricians,' Mr Frydenberg said.
'At around five per cent of GDP, our residential construction industry is vital to the economy and our recovery from the coronavirus crisis.'
The price caps will be higher for this round of the loan deposit scheme, including $950,000 for Sydney, $850,000 for Melbourne and $650,000 for Brisbane.
The announcement comes before Tuesday's federal budget, which will show a record deficit of about $200billion and debt heading towards $1trillion as the government seeks to stem the economic damage from the coronavirus pandemic.
The measure allows first home buyers to obtain a loan for a new or newly built home with a deposit of as little as five per cent, with the government guaranteeing up to 15 per cent of the loan (stock image)
It is widely expected the government will bring forward income tax cuts, deliver a raft of tax breaks for business, introduce a wage subsidy for hiring extra workers and boost investment in infrastructure and manufacturing.
Some economists are also predicting the Reserve Bank could cut interest rates on Tuesday to a record 0.1 per cent and make other policy changes to add bang to the government's budget day buck.
Mr Frydenberg has pitched the budget as a two-step process, with a boost in spending now to fuel growth and get people back into work followed by a shift back to fiscal restraint once unemployment is 'comfortably back under six per cent'.
Unemployment hit 6.8 per cent nationally in August, with the three hardest-hit states being SA, Queensland and Victoria and youth unemployment sitting on 14.3 per cent.
The Australian economy contracted by seven per cent in the June quarter, confirming the nation was in recession following the 0.3 per cent decline in the March quarter.
Labor is concerned the government's winding down of the JobKeeper wage subsidy and supplemented JobSeeker payment comes at a time when the economy and labour market remain weak.
It wants to see a comprehensive jobs plan.