New Government Policies in relation to helping people buy a home
written by Scott Lawson and shared with permission.
With the election over and the Labor Government sworn in, it is the perfect time to refresh our understanding of their election promises to assist people buying their first home (or re entering the market). Please note these are the statements and promises in the lead up to the election. The actual roll out of the promises and new schemes is another thing. It could be some time before all the details are released but you can be assured we will keep our ear to the ground and share the news as it breaks.
First Home Loan Deposit Scheme (FHLDS)
This is the support from the Federal Government that waives the Lenders Mortgage Insurance (LMI) cost for first home buyers. Various threshold limits apply (but we expect an uplift in the maximum income and maximum purchase price in 2022). For the majority of buyers you need to save 5% of the purchase price. For this scheme to work, you actually need to save about 7% – but call us for more information if this grabs your attention.
Single Parent Home Buyer Scheme
An offshoot of the FHLDS, this scheme assists genuine single parents buying “back into the market” or “their first home” by waiving the LMI if the buyer has saved 2% of the purchase price. I have helped many single parents in the last 12 months with this scheme and it works really well. In reality you need to have access to about 3% of the purchase price if you are a First Home Buyer or 7% if you have owned before but find yourself “re-entering” the market.
New Home Buyer Scheme
Another offshoot of the FHLDS, this is for first home buyers who are building a brand new home or buying a brand new home (eg. off the plan purchase). The LMI is waived if you can save 5% of the purchase price. Once again, we find that savings of 7% are actually required to make this work.
Help To Buy Scheme
This is a brand new scheme and promise from the new Labor Government. The concept is you buy 60%+ of the home and the government makes up the remaining 40%. There are lots of details missing on this (as it is a brand new scheme). You will still need genuine savings but you could potentially buy at a higher purchase price than you otherwise might have been limited to. We will keep our ear to the ground and release information as it becomes available.
Waive Stamp Duty
This is a Victorian State Government initiative but works hand in hand with the above. The Stamp duty cost is generally about 5% of the purchase price, so if you are buying a $600,000 property, you will avoid a $30,000 cost. Coupled with one or more of the above and you are off to a great start. We note the thresholds on waiving the stamp duty sit at $750,000 so it is important to speak to a broker before launching off and making an offer.
First Home Owners Grant ($10,000)
This is another Victorian State Government initiative. If you are buying or building a brand new home you can look forward to a $10,000 gift from the State Government. This in essence increases your deposit money by $10,000 thus reducing the loan required by $10,000. This works hand in hand with the above benefits.
Reach out to our mortgage brokers at Mortgage Choice Richmond (Vic) for more information that might help you with your next purchase. It doesn’t matter how far into the future you are planning, it is never too early to have the first conversation.