Australian property prices have been rising over the years and buying a home for the first time has been getting harder, with affordability decreasing. However, 2020 has seen a big change in this pattern as interest rates have dropped, there is a significant drop of investors in the market, and nationwide significant government incentives for first time home owners in 2021. Let’s dive into the three main grants by the federal government, what they are and who are eligible to claim the said grants.
- First Home Owner Grant or the FHOG is a one-off government payment incentive formulated to encourage as well as assist first time home buyers across the country to purchase a property. Whereas the size and eligibility criteria of the grant may differ from state to state, it largely applies to first-time property owners who are either purchasing an existing home that has never been lived in or building one from scratch.
Eligibility Criteria to claim FHOG:
> The applicant has to be an individual, cannot be a company/trust.
> The applicant must be of at least 18 years of age.
> The applicant should be a permanent resident or Australian Citizen.
> The applicant or applicant’s spouse/partner/co-purchaser must not have previously owned an interest in land in Australia, which had a residence on it before 1st July 2000.
> The applicant/applicant’s spouse/partner cannot have lived in a self-owned residential property from 1st July 2000.
> The applicant must not have claimed the grant previously or apply with someone who has already claimed it.
> The applicant must occupy the home as principal place of residence or PPOR within 12 months of the construction/purchase and the minimum occupancy period is 12 continuous months. - The First Home Loan Deposit Scheme or FHLDS that was launched on 1st January, 2020 is a federal government scheme that allows eligible first home buyers with a small deposit (less than 20%) to get a home loan. Under the FHLDS, the Australian government partly guarantees some low-deposit home loans each year, for eligible low and middle-income earners who have saved up at least 5% of a property’s value, thereby allowing them to avoid the Lenders Mortgage Value or LMI. The FHLDS can be used in co-occurrence with other incentives in place for first time home buyers by the home loan provider as well as with other state grants by the government.
However, since there are only 10,000 spots every financial year available for first time home buyers who want to avail this scheme, in a given year only 1 in 10 first time home buyers will be able to successfully avail the scheme due to limited slots in comparison to higher number of first home buyers.
Eligibility Criteria to claim FHLDS:
> The applicant must be of at least 18 years of age.
> The applicant should be a permanent resident or Australian Citizen.
> The applicant/applicant’s spouse/partner/co-purchaser must not have previously owned an interest in land in Australia.
> The applicant should be earning $125,000 or less annually if single and less than $200,000 annually for couples.
> The couples must be married or in a de-facto relationship.
> The applicant must be able to provide a deposit of at least 5% of the property’s value. - The First Home Super Saver Scheme or FHSS is a straight forward scheme that was introduced to allow first home buyers to save a deposit for their first home inside their super by withdrawing a portion of their extra super contributions. Buyers can withdraw a maximum of $15,000 per financial year, with an overall limit of $30,000.
Eligibility Criteria to claim FHSS:
> The applicant must be of at least 18 years of age.
> The applicant should be a permanent resident or Australian Citizen.
> The applicant should have never owned a property in Australia.
> The applicant must not have requested a release of FHSS funds for a home purchase in the past.
> The applicants must be buying a home for residential purposes only and live in the property for a minimum of 6 months within the first 12 months of ownership.
> As per the Australia Taxation Office or ATO, property owners who have experienced financial hardship that lead to the loss of ownership of a home may be eligible to participate in the scheme, subject to the approval of the department.
So, if you are an Australian citizen, above the age of 18 and eligible for one or more than one schemes, then you can also apply for multiple government grants at a time.
Get in touch with our expert property and real estate consultants for a detailed investment portfolio and more information on how to claim multiple grants at once and get maximum benefit out of them as a first-time home owner.