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Buying Your Dream Home – Steps and Help Available

Written by Melissa Grimshaw

Congratulations on reaching this exciting milestone in your life!  You have worked hard, completed your education or training, and now you are earning real money – the kind that significantly reduces your two-minute noodle dinners.  It’s time to chase the Great Australian Dream: owning your own home.  Homeownership offers the security many of us seek, whether we realise it or not.

However, the path to buying your dream home might seem daunting at first glance.  It is important to remember that few of us start with our dream home.  Instead, we begin with a property that sets us on the journey toward eventually obtaining the keys to that dream home.  This journey looks different for everyone, but some universal steps can help us all get started.

DID you KNOW – 66% of Australian households owned their own home with or without a mortgage as at 25 05 2022.  ABS consensus survey 2021

First Steps and Assistance Available

Navigating the world of home buying is easier with a good mortgage broker and financial planner by your side.  They can help you access several first home buyer schemes and grants designed to make the dream of homeownership more attainable.  Here is a closer look at some of these opportunities.

  1. First Homeowner Grant (FHOG)

What is it?

Eligible first-time homeowners, can receive a grant ranging between $10,000 to $30,000 to buy a new home, depending on the state. For example, in Queensland, you could get up to $30,000 for homes valued at less than $750,000.

Eligibility:

  • You are aged 18 years and older and an individual (cannot be a company or trust)
  • Be an Australian citizen or permanent resident.
  • You and your partner must not have previously received a first home grant in any other state or territory of Australia and
  • You and your spouse must not have owned a residential property in Australia.
  1. First Home Guarantee Scheme (FHBG) 

What is it?

This scheme allows eligible first-time buyers to purchase a home with as little as a 5% deposit, avoiding lenders mortgage insurance (LIMI), with 35,000 places available in the 2023/2024 year.

The scheme is part of an initiative that the Australian Government announced and administered by Housing Australian whereby the government is guaranteeing part of the home loan for the participating lender.  The government is taking way some of the risk from the lender.

Under the scheme, the home can be an existing home, townhouse or apartment, house/land package, land and a sperate contract to build a home or an off the plan apartment or townhouse.

Eligibility:

  • You are aged 18 years and can apply as an individual or joint applications.
  • Be an Australian citizen or permanent resident.
  • Earn up to $125,000 per annum for individuals or $200,000 combined as joint applications.
  • Must intend to be occupy the purchased property.
  • Not owned a property in Australia previously.

Important Details:

  • Only a select panel of lenders participate – currently 33.
  • Property price caps vary by state and territory as below:

mel feb table 1

Consideration:

 A smaller deposit does mean a larger loan and higher loan repayments.  It may be possible that the additional interest burden associated with a higher loan can outweigh benefit of saving on LMI.

Therefore, it better to obtain professional advice first.

  1. Family Assistance Scheme (FHS)

What is it?

Similar to the FHBG scheme, though this is for eligible single parents or single legal guardians of at least one dependant to buy own home sooner.   There are 5,000 places available for the 2023/2024 year, and your deposit is as little as 2% for the same capped property values listed above without the need to pay LMI.

Eligibility:

  • You are aged 18 years and apply as an individual.
  • Be a single parent or legal guardian of at least one dependent.
  • Be an Australian citizen or permanent resident.
  • Earn no more than $125,000 per year.
  • Intend to be owner occupiers of the purchased property.
  • Not owned a property previously in Australia.

Consideration:    Similar to the previous scheme.

Please Note:  Both schemes have their intricacies, and it’s advisable to consult with a mortgage broker or financial planner to understand how they can work for you.

  1. First Home Super Saver Scheme (FHSSS)

What is it?

Designed to save for your deposit through superannuation contributions and allowing you to obtain some tax savings at the same time.

The contributions into super must be voluntary, therefore they are either pre-tax dollars (salary sacrifice or personal concessional contributions) or post tax dollars – non concessional contributions.

You are only able to contribute up to $15,000 per year within allowable caps and able to withdraw a maximum of $50,000 + earnings for the deposit individually.

Couples may be able to withdraw $50,000 each from respective supers, up top $100,000 + earnings between the two of them.

Eligibility:

  • Must be 18 years or older at the time you apply to withdraw the funds.
  • Never owned property in Australia at all.
  • Make voluntary contributions.
  • Occupy the property for at least 6 months of the first 12 months of owning the home.

Consideration: – To be eligible to withdraw money from super, a condition of release must be met.  This means that you must have the intention to contribute into super to buy a home and your withdrawal is for that purpose.  You may not be able to withdraw if you change your mind on purchasing a home.  If you do withdraw and not purchase a home, you may be liable for FHSSS 20% tax.  You should obtain professional advice from your financial planner to ensure that the scheme is right for you.

Please Note:  The final amount that you can withdraw from super is determined by the ATO.

Therefore, it is important that when you are close to signing a contract for your property, apply for the ATO determination first before signing, so you know how much you will receive as part of the payment on your property.

  1. First Home Concession

What is it?

In Queensland, when purchasing your first home, may be able to apply for the first home concession, for transfer duty.   This applies for homes that are valued under $550,000 and can save you up to $15,925.   There is a partial exemption for homes between $550,000 to $650,000.  There are also  concession in Victoria.

Eligibility:  

  • Be legally acquiring the property as an individual.
  • Never claimed first home vacant land concession
  • Have never held interest in another residence anywhere in Australia or overseas.
  • Be at least 18 years of age
  • Move into the home and live there daily within 1 year of settlement.
  • Not dispose of all or part the property before you have moved in
  • Paying market value for the home between $500,001 and $549,999.

Your Path to Homeownership

Imagine a young professional named Alex, who after planning and building savings, utilized the First Home Super Saver Scheme and the First Home Guarantee Scheme to purchase a modest apartment in a growing suburb.

The first step on the property ladder allowed Alex to build equity and gain valuable experience in homeownership, setting the stage for future move/s to a dream home.

Alex’s journey demonstrates the practical steps toward achieving what might seem like an unattainable dream.

Let’s make your dream a reality

Embarking on the journey to homeownership is a significant step, and its one you don’t have to take alone.  With the right guidance and understanding of the assistance available, you can navigate the path with confidence.

Things to think about:

  • Your Mindset – Don’t aim for your dream property in the first instance, settle on a compromise to give you the start that you need to build equity for the next home. Ensure you have the mindset that this is not your dream home, it is the start of your journey to obtaining the dream.
  • Set a Budget: It is important to set yourself the savings goal and have a budget that will help you achieve that goal. You should also stress test your budget as once you are a homeowner, there are more expenses to factor in that you don’t have when renting such as home insurance, rates, repairs and maintenance.  You are also subject to interest rate movements.
  • Utilise Professionals – Speak to a mortgage broker rather than just approaching your bank. They are there to help negotiate the best home loan for you to suit your needs and purpose and ways to structure a loan.  They can help you apply for some of the available schemes that we have discussed above as well.
  • Speak to your financial planner to get the right savings structures in place, insurance needs and estate planning. A planner can even help you model different options and scenarios of property purchasing.
  • Sourcing your home, can be daunting as well, though with a good real estate agent/buyer’s agent in place, this can take some of the stress away as well. They can help you find the right property that ticks most of your boxes initially.

Contact us today  to discuss how we can bring you closer to the great Australian Dream of homeownership.  Together, we will explore the options, find the right schemes/loans/property for your situation, and start you on the path of your dream home.

Book a FREE 15 minute meeting

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