According to the Perceptions of Housing Affordability Report, 2017 released by CoreLogic recently, 87% of Australian non-property owners are concerned if they would be able to afford their first or next home. The same report also reveals that 62% of the people believe that housing affordability is worse than it was a year ago and 82% believe that it will be equally bad or even worse in the coming year.
The major impediments to housing affordability cited by the report include the home loan deposit, stamp duty and foreign buyers, in that order. Indeed, saving up a home loan deposit is a major deterrent keeping many first home buyers from entering the property market.
On average, a $500,000 property requires a 20% deposit of $100,000 that could take borrowers over 5 years to save.
A tall order, especially in the time of rising inflation and not so swiftly expanding paychecks, one would say. No surprise then that first home buyer commitments only comprised 13.6% of the total owner occupied housing finance commitments in March 2017.
Helping first home buyers get closer to their dream home
Housing affordability was a key point in the latest budget announcement. Apart from other measures, the government proposed The First Home Super Saver Scheme allowing Australians hopeful of entering the property market an opportunity to save funds at a discounted rate through additional contributions to their superannuation fund.
However, this is not the first time that the Government has tried to alleviate the situation for first home buyers. In 2001, the Government had started the First Home Owner Grant (FHOG) of $7,000 that was doubled up to $14,000 in the years 2008 and 2009.
Currently, different states are offering different amounts as grants (check state-wise lists below for more information), making it easier for first home owners to break into the property market.
The First Home Owners’ Grant (FHOG) at a glance
As a first home buyer, you probably know that you are eligible for the First Home Owners’ Grant in Australia. However, what you may not know is that while the process of receiving the grant is similar across the country, the amount may vary across different States.
It is worthwhile to check your State’s website for extra benefits as apart from the basic grant amount, some States also offer stamp duty concessions, especially for new constructions.
To apply for the first home owners’ grant, you may lodge your application through your mortgage provider or download the application form and lodge it yourself after the sale process is complete. Apart from the application, you would also be required to submit other paperwork including the proof of your identity and the contract of sale.
|Remember that the FHOG approval process is stringent and time bound, and one must not lose the benefit simply out of confusion or shying away from taking professional help. Mortgage brokers at HashChing have helped many first home buyers like you purchase their first property with significant savings on their home loans. Read Susan’s story to know more.|
Am I eligible for First Home Owners’ Grant (FHOG)?
If you are a first home buyer, the first home buyers grant can take you much closer to buying your property. Most lenders are authorised to receive the grant on your behalf that can be utilised as a part of your home loan deposit. The first home buyer grant is tax-free, and it goes without saying that you are eligible for it only once.
To be eligible for the grant, the following criteria must be fulfilled:
- At least one of the applicants applying for the grant must be an Australian citizen or a permanent resident of Australia.
- Each applicant must be 18 years of age or above.
- The first home buyer must be a person, not a company or trust, and neither you nor your spouse should own or have owned a residential property in Australia before.
- Neither you nor your spouse must have availed the grant before.
- You must occupy your first home as your principal place of residence for at least 6 months continuously, within the first 12 months of the construction or purchase of your home.
Once your application is approved, the time of payment of the grant would vary according to the type of dwelling. It may also vary in different states. Generally, for a new home, the payment is made on settlement.
Download the benefits sheet for your State to know more:
Quick answers to your specific home loan enquiries
Buying a property is a major financial decision, and it is important to be guided by the best. As a first home buyer, you may feel lost in a market overflowing with jargons, unsolicited advice and home loan options that may seem too good to be true. At HashChing, we help you cut through the clutter by answering your specific home loan queries online, for free. We also offer you broker pre-negotiated home loan deals with low interest rates that you can compare online to make an informed decision. If you are a first home buyer looking for assistance, ask a broker now to buy your first home sooner.
As a bonus, we have created a first home buyers checklist for you that can be downloaded here.
By Vidhu Bajaj
HashChing Content Writer