Buying a Home? The 5 Home Buyer Schemes You Need to Know Before You Buy!

Buying a home … where do you even begin? Do you find your new home first? Start choosing the paint colours? Plan a housewarming? Probs not. There are a few hoops to jump through before buying a home, especially if it’s your first home.

The good news is that there are plenty of professionals who do ALL the dirty work for you. The even better news is that there are various home buying schemes and incentives available in every state to help cut down the costs of buying a home.

Ready to dive into the various home buying schemes and tips on buying a home?

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We’ve asked our residential mortgage broker and founder of Clover Financial, Phoebe Blamey to help us make sense of it all.

buying a home - home buying schemes and incentives - clover financial — Phoebe has been a mortgage broker for over 20 years. Source: Supplied

Buying a home: Where do I even start?

Start by asking yourself a few questions.

1. Where do you want to live? How much does it cost to buy in that area? Look around online to see what houses are going for.

2. What type of home are you after? Are you looking for just a house or a house and land package? When you are buying a house and land package prices are usually set. If you are buying an established home you might buy at auction or private sale.

mum central — Doing your research really matters when searching for a home. Source: Adobe Stock

3. What are the main things you want? Make a wish list of what you want in a property … garden, quiet street, build-in wardrobes, pool, air-con, 2 bathrooms? Think of your non-negotiables and the things you don’t mind skipping out on. You may find not be able to tick every single checkmark off your dream house list, but you may come pretty close!

4. And the million-dollar question – Can you afford it? This is where it gets interesting and also where it’s a good idea to get a little outside assistance. You can use an online calculator to determine how much your mortgage payments will be and how much of a deposit you will need based on your income.

But you will also need to be approved by a bank before you buy a home.

5. How much deposit do you need? You can buy a home with as little as a 2% deposit under certain circumstances (see the schemes below for more on this) but if you put down less than 20%, then you may need to pay the lender’s mortgage insurance (again, this depends on if you are eligible for any home buying schemes).

Get to know the home buying schemes

The government has a lot of different home buying schemes at the moment which is great news for home buyers. Below are a few to keep in mind when buying a home.

1. First Home Owner’s Grant

WHO IS IT FOR? Anyone buying their first home (certain terms and conditions apply)

First Home Owner Grant (FHOG) is a one-off government payment designed to encourage and assist would-be first home buyers across the country to purchase a property.

The size of the grant and the eligibility criteria attached to it differ in each state and territory, but in most states it applies to first-time property owners who are either purchasing an existing home that has never been lived in or building an entirely new home.

Below is a quick rundown of the First Home Owner’s Grant by state:

AUSTRALIAN CAPITAL TERRITORY:

The ACT doesn’t have a first homeowner grant but it does offer a stamp duty concession for vacant land, new and established properties alike.

NEW SOUTH WALES:

Up to $10,000 on new homes up to $600k, and house and land package up to $750k in value.

NORTHERN TERRITORY:

Up to $10,000 for newly built homes.
There is also the Household Good Grant, up to $2,000 and the Build Bonus Grant, up to $20,000 towards the construction of a new home. This grant is available to everyone, not only first home buyers.
The Territory Home Owner Discount offers concessions up to $18,601 on stamp duty for new or existing homes or land.

QUEENSLAND:

Up to $15,000 grant for newly built homes less than $750,000.
There is also the First Home Concession – a concession of up to $15,925 on any home (established) less than $550,000.
The Vacant Land Concession is also for first home buyers who purchase land up to $400,000 in value. The concession amount is up to $7,175.

SOUTH AUSTRALIA:

Up to $15,000 to be put towards new homes valued up to $575,000.

TASMANIA:

Up to $20,000 to put towards a new home.
First home buyers looking to buy an established home aren’t eligible for the FHOG but they can apply for a transfer duty concession of up to 50% on homes valued up to $400,000.

VICTORIA:

Up to $10,000 for metropolitan areas and regional areas. Both only apply to properties valued less than $750,000.
There are also several concessions available including the Off-the-Plan Duty Concession, the First Home Buyer Duty Concession and the First Home Owner with Family Duty Concession.

WESTERN AUSTRALIA:

Up to $10,000 to those building or buying new. The concession rates vary according to the value of your home.

2. First Home Loan Deposit Scheme

WHO IT IS FOR?: Income earners making less than $125,000 with a 5% deposit buying an established home.

The purpose of the First Home Loan Deposit Scheme is to waive the lender’s mortgage insurance (LMI) that comes when you buy a home with under a 20% deposit. This is aimed at enabling you to purchase your first home sooner with as little as a 5% deposit.

Let’s say you find a home for $500,000 that you love. But you only have $10,000 saved up. Under most circumstances, you would have to pay the lender’s mortgage insurance to secure your loan with the bank.

On average this is .002% of the total loan so a $550,000 loan would be an extra $16,000 with the lender’s mortgage insurance.

But under the First Home Loan Deposit Scheme, you will be able to secure the loan AND avoid paying Lender’s Insurance. It also brings up the maximum purchase price to 95% as opposed to 80%. SCORE!

One thing to mention about the First Home Loan Deposit Scheme is that there are price caps, ranging from $250,000 to $700,000 depending on where you live.

3. New Home Guarantee

WHO IS IT FOR?: Earners making less than $125,000 with a 5% deposit buying a house and land package or off-the-plan home.

buying a home off the plan — The New Home Guarantee is perfect for those looking to buy off the plan. Source: Adobe Stock

This is the same type of home buying incentive as above but for people looking to buy a home not yet built. You can still avoid lender’s insurance, increase your maximum loan amount AND buy your dream house and land package with just a 5% deposit under the New Home Guarantee.

4. Single Parent Family Home Guarantee

WHO IS IT FOR: Single parents with dependents.

This is an excellent scheme for sole parents as I am sure most would agree nothing beats the security of owning your home – particularly with low-interest rates versus high rent! The family home guarantee scheme offers to guarantee the loans of single parents (with dependents) who want to build or buy a home with a deposit of 2%. And like the schemes above you won’t have to pay lender’s insurance.

The single parent does not have to be a first home buyer but does need to meet other eligibility criteria. It also increases your borrowing even more to 98% rather than 80%.

5. Super Saver Scheme

WHO IS IT FOR?: Anyone looking to use their super as a way to save for a house.

The super saver scheme allows you to make additional contributions to your super that you can take out to use as a down payment on your home.

It’s quite simple to set up (you’ll need to just fill out one form) and you’ll need to choose your amount. It’s also a good idea to save for at least a year so if you’re planning on buying in the next year or so, check this one out!

Say you add an extra $100 a week to your super. In a year, you can use this extra money to put on a house deposit. However, the maximum is 50k and remember, it has to be ‘additional’ super, not just your employee-paid super.

Get the help you need

Now, remember, buying a house isn’t a solo job. There are heaps of professionals to help make sense of every step.

Your mortgage broker will be able to organise your loan approval and help you with any of the Government schemes that are available.
Your conveyancer will look at your contract and advise you. They also organise the transfer of the title between the vendor (seller) and you.
You will also meet agents, builders, etc depending on if you are buying an established home or building a new home.

Join the first home buyer’s club!

We also highly suggest you have a look at Clover Financials’ First Home Buyer’s Club which is completely FREE and helps you when buying a house.

Membership is free and all members receive:

An information pack that breaks down everything you need to know about buying your first home, into super simple, realistic and practical steps.
A workbook to keep you on track and instructional videos to help build your knowledge too.
Access to the First Home Buyers Club Facebook Group, where you’ll receive market updates, clarity, support and answers to any questions you may have.

Be sure to also grab yourself a copy of Phoebe’s book The Happy Money Journey and receive a free copy of the workbook plus free postage. This financial bible is a step-by-step formula that breaks down how you spend, save and invest, and how those things build your future. Simply use the code MUMSPROMO at checkout (valid until 23 November).