First Home buyers that are Australian citizens or permanent residents may qualify for one or more schemes and incentives that can save them a huge amount of money over the term of their mortgage.
So, what’s available in NSW and how do you access this help?
Number 1: First Home Buyer Assistance Scheme
This is actually a discount on stamp duty (also called transferee duty) and you apply for it through your solicitor. There are eligibility criteria (including for spouses and de facto partners of the first home buyer, age requirements, property requirements and residence requirements) that must be met to be eligible, but most first home buyers will find that they do qualify for participation in this Scheme.
If you meet the eligibility criteria, you can apply for a full exemption if:
Number 2: New Home Grant
If you’re buying a home for the first time in your life in Australia and the property is newly built or gutted and then rebuilt, you can apply for the grant of up to $10,000 through your lender if:
This scheme releases extra money you have saved or sacrificed to your superannuation for the purpose of buying your first home in Australia. A maximum of $30,000 may be released and you only have one opportunity in your lifetime to make use of the Scheme. First home buyers can access the Scheme, as can persons who have suffered hardship – for example, a financial set-back caused by natural disaster, ill health, divorce or job loss.
You can use this scheme if you are a first home buyer and both of the following apply:
If you intend you make use of the Scheme, you can apply directly through the ATO or one of its authorised agents. Canstar has a list of authorised list of agents you can access online or you can find the relevant form on the ATO website for a direct application. In order to participate, you must receive a determination from the ATO before exchanging contracts. As it takes 3-5 weeks for the funds to be released, you should start the application process at the same time as you apply for a home loan. Further requirements and time limits apply which you should be aware of if you do enter the Scheme because failure to follow the ATO’s directions can have unintended tax consequences for you in respect of funds released from your Super through the Scheme.
Number 4: First Home Loan Deposit Scheme
This scheme helps to avoid first home buyers paying mortgage insurance where their deposit is 5% or more but less than 20% of the purchase price. Property price caps apply. In NSW the price cap is $700,000 for Sydney and large Regional Centers and $450,000 for the rest of the state.
For example, on a $650,000 home unit in a major regional center, where a first home buyer puts down a deposit of $32,500 (being only 5% of the purchase price) mortgage insurance would cost that buyer approximately $25,700, which the buyer would pay back to the lender over the course of a usual 30 year loan. Under the FHLD Scheme, however, first home purchasers that qualify for this scheme would save the costs of mortgage insurance which means their mortgage payments will be smaller month to month than had they not participated in the Scheme. This also means it is easier to pay back your home loan faster if you pay off a bit extra on your mortgage every month.
Purchasers can apply to participate in the FHLD Scheme through approved mortgage lenders. Not all financial institutions are participating in this Scheme so you may need to apply to a lender that is not your usual bank.
One significant catch is that only 1 out of 10 new home buyers will be able to take advantage of the scheme in 2020 with most applications being accepted in January and February only. CanStar maintains a list of lenders participating in this Scheme on its website. Buyers thinking of purchasing a property in the next year or so may find it worthwhile to start making inquiries early on with participating lenders as to when the next tranche of applications will be accepted. You may need to shop around if your preferred lender can take no more applications for the year.