21 May 2009

Federal Budget 2021: All the major property tricks for first homebuyers explained

For many Australians, buying a first home is both stressful and exciting. Nevertheless, owning a home in Australia can only be done through proper and strategic planning as well as making the most of what the market has to offer.  

With the Australian Federal Budget announced in May 2021, first-home buyers can buy a new home whilst using lower deposits as well as reduced taxes. Below, let’s examine the set of guarantees the Federal Government announced - and how these apply to first-time buyers in 2021.

First Home Loan Deposit Scheme

On January 1, 2020, the Australian government introduced the First Home Loan Deposit Scheme. With it, the government guaranteed up to 10,000 first home buyers the chance to buy a home at a 5% deposit. Also, buyers don’t have to take out the LMI or lender mortgage insurance. This scheme was introduced in 2019, for both existing and new homes but today only applies to first-time home buyers.

Who is eligible for this type of scheme?

Although this deposit scheme was announced for first home buyers, there are some criteria they should meet. Such include:

  • Potential buyers should be 18 or over;
  • A single buyer needs to have an income of $125,000 or under;  a couple of $200,000 or under;
  • Intended for buyers who want to purchase or build a new home
  • Suitable for potential buyers, who purchase a home for the first time as their primary residence, and don’t already own a home in Australia.

FHG or Family Home Guarantee Scheme

This scheme works almost the same as a first home buyer's deposit scheme.
The Family Home Guarantee scheme is a great opportunity for single parents who want to buy a home at a 2% deposit. The scheme offers 10,000 guarantees for single parents looking to purchase properties.

Who is eligible for FHG?

In order to be eligible for Family Home Guarantee, potential buyers need to meet the following criteria:

First Home Super Saver Scheme or FHSS

Finally, the third scheme announced by the Australian Federal Government was the  Super Saver Scheme for first-time buyers. The scheme allows buyers to make financial contributions and later withdraw these as deposits, to purchase or build a new home. First home buyers are able to save 30% tax if they take advantage of this scheme.

Essential tips buyers should consider when buying a first home

Not all Australians are prepared to buy their very first house right off the bat. Despite the Australian Federal Government’s federal budget schemes, all potential borrowers should be aware of the risks a mortgage loan entails. Here are some tips on what to pay attention to before making any mortgage loan decision.

Make calculations

Mismanaging a loan for purchasing a home in Australia can lead to serious debt. Potential buyers should know how big of a loan they can afford. They also need to estimate if the down payment will suit their budget. If potential buyers have already made a financial plan for years in advance, they will make a more informed decision in purchasing a property. Therefore, it is essential to make suitable purchase calculations, especially in terms of budget and spendings.

Know your credit report

A strong credit report is essential when Australian borrowers decide to get a house loan. Each lender you collaborate with will ask for your credit report, as it includes your history repayments. If there are some specific financial issues in your history, you likely won’t be eligible to get the loan. This is why borrowers should ensure that their credit history is viable. Moreover, to avoid issues with the loan application, the best practice borrowers can adopt is to pay all their bills on time and track their credit score following each payment.

Know your limit

First time home buyers in Australia need to know their forthcoming and ongoing costs. This will help them set limits on how much they will spend on a home.
Upfront costs include the home purchase price, loan-application fee, government fees, the LMI or lender mortgage insurance, inspections. and additional fees.

If potential buyers have a ready-to-go budget to cover these costs, the job is halfway done already. However, there are also other ongoing costs that deserve equal attention from homebuyers. When purchasing a property in Australia via a loan, the borrower will be responsible for all covering extra costs. Such can include loan repayments fees, interest charges, and additional strata fees.

Explore loan section

Considering all mortgage loan options, borrowers are required to do their due diligence and research the most suitable options for them. When shopping for a home loan, it is wise to compare different rates and fees, as well as each loan’s requirements. External factors, like the current business climate and the country’s economic progress, can also impact the loan amount. The key aspect to look at here are oscillations in the interest rate.

FRHL is here to guide you to purchase your dream home in Australia!

Get in touch with one of our pro brokers and learn all factors and considerations that make first-time home purchasing in Australia a worthwhile investment!

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