Close to home: How the government is helping you to buy a house anywhere in Australia
Is the Australian dream over for those looking to buy a house? Property prices are at what some would call “dangerously dumb” levels. A study has found that it takes up to eight years for a buyer to save enough money for a 20 percent Sydney home deposit.
However, even in this economic climate, owning a home is in our top three financial priorities. To counteract the impact of rising prices, there is assistance out there, like home owner’s schemes and grants, that can help you to put a property in your name.
So what does it take to make the Australian dream come true? We’ve uncovered helpful schemes and grants on offer for you to investigate before you make an offer on a residential property.
Homecoming: A special report
Buying a home is likely to be the biggest purchase of your life. Which is why we’ve done a deep dive into ALL you need to know. Follow our four-part series here:
|Part one: Real estate agents: How to spot the right property agent|
|Part three: Buying a home: Budget for all the extras not just the house|
|Part four: Home buyers tips: From search to sold|
Getting a deposit together to buy a house has been made easier
First things first, are you looking to buy your dream home or your first home?
To help you decide, do the maths to work out how much you’ll need for a deposit. We all know that the price of a property depends on the area you’re looking to buy a home in.
In Sydney, the median house price is above $1.3 million, while in Melbourne it’s around $900,000. This means that if you need a 20 percent deposit, you need to save up about $1,500 a week. This amount seems like a lot, so it’s no wonder that only 15 percent of people born between 1982 and 1991 are buying a home.
You’d think regional prices would be better, but these have also seen a rise in prices. In fact, compared to the 12.4 percent price hike in capital cities, regional home values rose by 17.7 percent in 2021.
The median price increase in regional NSW and regional Tasmania, for example, is 21.1 percent and 20.8 percent respectively. To illustrate, take Bega Valley, NSW — median home prices are now around $650,000, only 28 percent less than house prices in Melbourne. Considering that this is a regional area, the difference in prices should be greater. But prices today are going through the roof and regional areas have not been spared.
However, governments, particularly in NSW where prices are highest, have plans to overhaul property tax that would replace the existing stamp duty. In summary, these plans give first home buyers a $25,000 grant to help with your deposit.
In other areas, you can count on four other home buyers’ schemes and grants to help you with your loan.
The First Home Loan Deposit Scheme (FHLDS)
This scheme involves the government helping you to buy a house with a deposit of as little as 5 percent. That’s a lot less than the 20 percent deposit usually required by the banks!
It also helps you avoid up to $10,000 in Lenders Mortgage Insurance (LMI). LMI is usually required by the banks if you have a deposit amount of between 1 and 20 percent.
A one-off payment is provided which insures your lender if ever you are not able to pay your mortgage.
In this scheme, the government acts as your underwriter and guarantor.
The First Home Super Saver Scheme (FHSS Scheme)
This scheme works with the help of your superannuation. If you make extra voluntary contributions to your superannuation, you can withdraw up to $15,000 to $30,000 to buy a home.
This will come from 85 percent of any concessional pre-tax contributions you’ve made, 100 percent of any non-concessional after-tax contributions, and associated costs or interest rates.
The Family Home Guarantee Scheme
For single parents, you can access extra help when you buy a house. With the help of the government, only a 2 percent deposit is needed without paying for LMI. That’s 18 percent less than the usual minimal deposit to avoid paying LMI.
This makes it easier for single parents with dependents to enter or re-enter the housing market, making it more affordable to buy a home.
The First Home Owner’s Grant
You can also count on the First Home Owner’s Grant to help you afford your first home.
In this grant, you can get up to $10,000 in tax breaks to help you with your deposit. Aside from your deposit, this scheme will save you up to $40,000 for your property purchase, in the long run, through your superannuation.
Can you apply for multiple grants and schemes to buy a home?
As long as they coincide with each other, yes! Getting these schemes and grants to align properly is challenging, but as long as you’re eligible, you can qualify for multiple grants.
Consider getting help
You can hire a mortgage broker to help you assess the range of home buyer incentives. And you can engage a real estate buyer’s agent to negotiate with the seller for you.
One thing to note is that you’re not the only one who can enlist this type of help. Sellers can also hire an agent whose job it is to get the highest price. If you get your own team, you’ll be better equipped to negotiate the best price for you.
Learn more about how sellers are using agents to get you to pay more for your next home here.
The whole process of buying a home requires research and patience. And if you stumble along the process, you can lodge a complaint with us and we’ll make sure you get your fair play.
If you’re ever deceived by a real estate agent or if you encounter any issues with buying a house, lodge your complaint with us. We’ll help ensure you're getting a good deal with your next home.