Federal Government home incentive schemes perfect for buyers

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Home Guarantee Scheme

LWP Group says the Federal Government’s recent announcement encouraging more first home buyers into the market by expanding three of its existing home deposit schemes comes at a perfect time for WA home buyers.

LWP Managing Director Brendan Acott said the initiatives will help many more West Australians to buy their first home and he urged interested buyers to apply for the schemes fast – as the Government has a cap on eligible applicants.

“LWP has many options to suit local buyers, particularly first home buyers and the financial incentives offered by the Government will only make buying a more attractive option,” he said.

The Government’s three-pronged initiative means first home buyers can enter the property market with as little as a 5% deposit, while there is also a category for single parents introduced in the 2021 budget, allowing some to enter with just a 2% deposit.

“LWP has many amazing opportunities for first home buyers in very sought after areas of Perth – from sustainable beach side developments to the stunning hills areas,” Mr Acott said.

More than 4,000 West Australians have already benefited from these schemes since the start of 2020.

The 3 schemes

1. The First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme will be available to eligible first home buyers.  Usually, first home buyers with less than a 20% deposit need to pay lenders mortgage insurance. Under this scheme, part of an eligible first home buyer’s home loan from a participating lender (most major banks are included), will be guaranteed by the National Housing Finance and Investment Corporation (NHFIC). “This means many people will be able to purchase their first home sooner with as little as a 5 per cent deposit – great news for many West Australians,” Mr Acott said. Any guarantee of your home loan is for up to a maximum amount of 15 per cent of the value of your property (as assessed by your lender). This guarantee is not a cash payment or a deposit for your home loan.

What type of property can be bought?

For a property to be eligible it must be a 'residential property'. This includes a house and land package, new home or land as options under the newly expanded schemes.  To find out if you are eligible check out the website https://www.nhfic.gov.au/what-we-do/support-to-buy-a-home/frequently-asked-questions/

Key criteria includes:

  • applying as an individual or couple (married / de facto)
  • being Australian citizen(s) at the time you enter the loan
  • being at least 18 years of age
  • earning up to $125,000 for individuals or $200,000 for couples
  • you must intend to be owner-occupiers of the purchased property
  • you must be first home buyers who have not previously owned, or had an interest in, a property in Australia

2.  New Home Guarantee

Eligible first home buyers looking to build or purchase a new home can apply for a loan to purchase an eligible property through a participating lender.  Eligible borrowers can use the guarantee in conjunction with other government programs like the first home super saver scheme, home builder grant or state and territory first home-owner grants and stamp duty concessions. The guarantee is not a cash payment or a deposit for your home loan.  For a property to be eligible it must be a 'residential property'. This includes a house and land package, new home, or land as options under the newly expanded schemes.

What are the timeframes for the New Home Guarantee?

Those building a new home (either under a house and land package or as a land and separate contract to build a home) must enter into an eligible building contract within 90 days of being pre-approved; and start building within 12 months of entering into the eligible building contract and finish building within 24 months of starting.

3. Family Home Guarantee 

The Family Home Guarantee aims to support eligible single parents with at least one dependent child in purchasing a family home, regardless of whether that single parent is a first home buyer or a previous home owner.  Usually, home buyers with less than a 20% deposit need to pay lenders mortgage insurance. Under this Scheme, part of an eligible home buyer’s home loan from a participating lender will be guaranteed by the National Housing Finance and Investment Corporation.  This is aimed at enabling people to purchase their first home sooner with as little as a 2 per cent deposit. Any guarantee of your home loan is for up to a maximum amount of 18 per cent of the value of your property (as assessed by your lender). Again, this guarantee is not a cash payment or a deposit for your home loan.

How does the Family Home Guarantee work?

Eligible single parents with at least one dependent child looking to build a new home or purchase an existing home can apply for a loan to purchase an eligible property through a participating lender. The National Housing Finance and Investment Corporation guarantees to a participating lender up to 18 per cent of the value of the property, provided the borrower has a minimum 2 per cent deposit, and is eligible for the Family Home Guarantee. This will enable single parents with at least one dependent child to enter, or re-enter, the housing market sooner.

Eligible residential properties generally include a house and land package, land or a separate contract to build a new home.

To find out more about the application process, visit NHFIC’s website at www.nhc.gov.au/what-we-do/family-home-guarantee/

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