As a First Home Buyer, you could be much better placed than you might imagine to afford a home. Although homes seem to cost so much more than they did when our parents bought, interest rates are lower, government assistance is greater than ever, and wages are far higher than our parents could have imagined. The truth is; buying a home has always involved some sacrifice but it’s not impossible and First National Real Estate has put together this guide to help you understand what financial assistance is currently available to you.
Federal Government Assistance Summary
First Home Loan Deposit Scheme (First Home Guarantee)
Supporting eligible first home buyers purchase a home sooner.
- For first home buyers without a 20% deposit (subject to bank lending assessment)
- Buy a new home with 5% minimum deposit
- 35,000 places for financial year 2022/23
- Restricted to new home builds and completed stock
- Avoid paying mortgage insurance
- Government guarantees 15% difference
Regional First Home Buyer Guarantee
Supporting eligible regional first home buyers to purchase a home in a regional area. As with the above program but with a limit of 10,000 places for financial year 2022/23.
Family Home Guarantee
Supporting eligible single parents with at least one dependent child to buy a home, whether that single parent is a first home buyer or a previous home owner.
- 2% deposit required
- 5,000 places for financial year 2022/23
- First home buyers or previous homeowners
- New and existing homes
- Single parent with at least one dependent child
- Maximum purchase prices apply
First Home Super Saver Scheme
The first home super saver (FHSS) scheme allows people to save money for their first home inside their super fund. From 1 July 2017, you can make voluntary concessional (before-tax) and voluntary non-concessional (after-tax) contributions into your super fund to save for your first home. From 1 July 2018, you can then apply to release your voluntary contributions, along with associated earnings, to help you purchase your first home.
- Salary sacrifice up to $15,000 per year into Super (up to a total of $50,000 across all years, from 1 July 2022)
- Taxed on withdrawal with 30% tax offset
- No income test
- Effectively allows saving for home deposit at 15% tax rate
NEW SOUTH WALES
First Home Loan Deposit Scheme
- 5% Deposit
- - Purchase price capped at $700,000 ( Capital City / Regional Centre) & $550,000 ( Rest of State)
First Home Super Saver Scheme
- Salary sacrifice up to $15,000 per financial year up to a total of $50,000 across all years
First Home Owners Grant
- $15,000
- Purchase less than $750,000
Stamp/Transfer Duty Concessions or Waivers
First Home Buyers Assistance Scheme (FHBAS) – Full or partial exemption on Transfer Duty on homes valued at less than $800,000
First Home Buyer Choice (Property Tax) – Choose between paying existing up front transfer duty or an annual property tax (new or existing homes valued at up to $1.5m or vacant land on which you intend to build a home with a value up to $800,000.
Shared Equity Home Buyer Helper - Assists single parents (with dependent children), single people (50 years and over) and first home buyers who are employed as nurses, midwives, paramedics, teachers, early childhood educators and police officers are key workers with buying a home. The NSW Government will pay up to 40% of the purchase price of an eligible property, retaining it as equity for as long as you are eligible for Shared Equity or until you sell the property.
First Home Owners Grant Addditional Information
- Home’s being bought or built must be new and valued at less than $750,000
- Combined value of land and home being built cannot exceed $750,000
Frequently Asked Questions
Q. Is it really harder to buy a home now than in the late 1980s?
A. Buying a home in Australia in the 1980s was very different from buying a home in Australia today. In 1988, for example, the median house price in Australia was around $70,000, whereas in 2023 the median house price is around $700,000. This means that the cost of buying a home has increased by about ten times in the last 35 years.
In 1988, interest rates were much higher than they are today. The average interest rate on a mortgage was around 18%, compared to around 2% in 2023. This means that the cost of borrowing money to buy a home was much higher in the 80s, making it more difficult for people to afford a mortgage.
Q. How do I work out what I can afford to spend on my first home?
A. What you can afford to spend is obviously determined by government grants, your current income and financial commitments as well as your savings and credit history.
You should carefully consider your current and future living expenses so you’ll be assured you can repay your loan and maintain the quality of lifestyle you’ll require. Once you know this, you can start talking to mortgage brokers and they will quickly give you an idea of what your buying budget will be.
Q. How should I start my first home search?
A. We recommend you visit www.firstnational.com.au where you will find our answers to the most common questions about buying your first home. Don’t be shy though; if you don’t see the answer to your specific question, just click the ‘get in contact’ link under our main menu and send us your question.
Most people start their search with an image of the property they would like to buy in their mind. Frequently they have a short list of suburbs they’re interested in as well.
Q. What questions should I ask a real estate agent about a property I’m interested in?
A. You should absolutely ask if there are any known issues with the property, such as mould, pest infestations, or structural problems. That’s just for starters.
You should also ask if there are any Material Facts that buyers would want to be aware of. Agents are required, by law, to inform you of any fact that you would reasonably want to know about before buying. This could include things like whether somebody has died in the property, whether there’s any history of illegal activity or violent crime, or whether there are any problem neighbours nearby.
Q. How do I make an offer on a house that’s for sale?
A. There are two ways.
An unconditional offer is when you offer an amount to buy the house as listed (with or without drapes, fixtures, etc.) without adding or negotiating any other conditions. Ask the agent for a copy of The Contract of Sale as it outlines everything that is included and specifies anything that is not.
A conditional offer is when you offer to buy the property only if the vendor accepts certain conditions.
These must be listed on the Offer to Purchase. For example, your offer may be conditional on arranging finance (but you really should get that approved first).
If finance cannot be arranged within a certain period of time, the offer becomes void. For your own protection, you should nominate a specific lender as your source of finance. Leaving out a nominated lender or having open- ended finance conditions on your Offer to Purchase may force you to take up finance at substantially higher rates, perhaps shorter terms, and from a lender you would not prefer to deal with. Another condition might be an extension of the settlement period. If the seller does not accept the conditions, further negotiation may take place or your offer may simply be declined.
Q. How do I make an offer on a house that’s going to auction?
A. You can either turn up to the auction and bid or make an offer prior, but it needs to be strong enough that the owner doesn’t think they’ll do better on the day.
If you’re going to make a bid before auction, make sure you’re ready to sign the contract and act quickly. There may be other buyers who have indicated to the agent that they want to be kept informed of any pre-auction offers that the vendor is likely to accept. In fairness to all parties who may have spent money on their enquiries and are preparing to bid at auction, the agent is obliged to inform them if the vendor has accepted an offer prior - verbally.
Q. Where can I find more detail on grants, eligibility and stamp duty discounts or exemptions?
A. There’s a lot of detail around who’s eligible, limits on purchase prices, places or types of properties you can or can’t buy, and grants and waivers that are specific to your state or territory.
Head straight to www.firsthome.gov.au where you can access all this additional information.
Disclaimer
While every effort has been made to assure the accuracy of this information, government financial assistance is subject to frequent changes and prospective purchasers should rely on their own inquiries. The latest information is available at www.firsthome.gov.au.