Specific to QLD | Justin Rappolt, Australian Home Mortgage Director
Top 5 First Home Buyer Grants & Incentives
From a Mortgage Broker
2023 brings challenges for first home buyers however also support from the banks and government. There is conflict,
- Interest rates have been steadily increasing since May 2022, which decreases borrowing capacity across the board. A limitation for First Home Buyers is often borrowing capacity, presenting a challenge in the current environment of lower borrowing capacity. However,
- There are a multiple grants & incentives to support the first home buyer achieve property ownership.
1) First Home Guarantee Scheme
Allows first home buyers to purchase a property with a 5% (plus stamp duty if applicable) deposit.
This is a first in best dresses scheme. The government released 35,000 allocations in July 2022, and spots still remain. Does not appear this scheme will be renewed in July 23. Eligibility criteria is reasonably inclusive to most first home buyers – Contact Australian Home Mortgage for more information & eligibility criteria.
Why does this help you if you’re a first home buyer?
- Reduce the deposit required because the government covers your Lenders Mortgage Insurance (LMI) Fee. When calculating minimum deposit requirements, a LMI fee, blows out the minimum deposit amount, even when added to the loan because most banks only permit a loan to house value of 95% (LVR).
- Save you money in interest costs over the long term because you have access to lower interest rates – the banks discount your interest rate because with the government is covering your LMI fee & you access <80% LVR interest rates instead of < 95% LVR interest rates (banks provide greater discounts for lower loan to value ratios).
- Decrease your monthly repayments as a result of no LMI fee & lower interest rate.
- Increase your borrowing capacity because you do not have to account for a LMI fee & you are in a lower interest rate bracket.
Note: You still have to confirm that the source of your 5% deposit is genuine, however the majority of bank policy today is permissive of either 5% genuine saving OR evidence of last 6 months rental payments via rental ledger.
2) Bank cash back incentive for first home purchases
A few banks this year have released campaigns to support first home buyers & win your business by offering between $3k & $4k post settlement.
Contact Australian Home Mortgage for more information & eligibility criteria.
This may help with moving costs, new home furnishing, or savings to pay off the home loan faster – its up to you, the funds can be used at your discretion.
3) $1 LMI offer with 15% deposit
One bank continue their campaign to reduce the LMI to a negligible $1 for first home buyers. The easiest way to avoid a LMI fee is to have a 20% (plus upfront stamp duty if applicable) deposit, however St George are saying you can avoid the fee with a 15% (plus upfront stamp duty if applicable) deposit.
Contact Australian Home Mortgage for more information & eligibility criteria.
This helps reduce a LMI fee which is often in the thousands and usually added to your loan to accrue interest. So you are avoiding the fee itself and the additional ongoing interest usually attached to a LMI fee.
4) First Home Buyer Stamp Duty Concession
The government supports first home buyers by covering the stamp duty cost, which is an upfront fee usually accounted for in your total payable deposit. If you purchase your first home for owner occupancy in QLD and meet the conditions such as;
- <$500k established home, OR
- <$250k vacant land.
Note there is also a partial concession for homes valued between $500k -$550k, and for vacant land $250k – $400k.
Contact your Property Conveyancer in conjunction with Australian Home Mortgage for more information & eligibility criteria.
You may be eligible to completely avoid a stamp duty fee which can save you in the tens of thousands of dollars.
5) $15k First Home Owners Grant
The $15k government grant applies to first home buyers whom meet the conditions & purchase;
- A new property, never lived in, off-the plan, OR
- land & build.
Caps apply, maximum $750k. Contact Australian Home Mortgage for more information & eligibility criteria.
The $15k can be contributed towards the costs to reduce your deposit requirements or you can request the release of the funds to use at your discretion, it depends on your savings position.
Coming Soon
The Government’s proposed ‘Help to Buy’ Scheme is expected to launch in July this year – still to be approved by Parliament, however keep an eye out for more information (contact me to stay in the loop).
First Home Buyers will be able to purchase a home with a 2% (plus stamp duty if applicable) deposit sharing the purchase (& equity) with the government.
The potential upside for 10,000 lower-income Australians;
- No LMI fee, this is covered by the government,
- Increased borrowing capacity allowing entry into the property market, however you will only own 60-70% of the property at the start.
Contact Australian Home Mortgage and watch out for more information.
Read more about grants across the nation here.
Contact us now
07 3229 7726 or 1300 733 483
Australian Home Mortgage
91 Bridge Street
Fortitude Valley
QLD 4006
ABN: 92 639 722 811
Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.