The Government has given a huge win to first home buyers, in the 2021 Federal Budget announced yesterday.
With house prices continuing to rise with an array of Government initiatives and incentives to help soften the potential blow to the property market during covid, the Morrison Government has announced new support to help first home buyers get into the emerging market.
On Tuesday night, Treasurer Josh Frydenburg confirmed that another 10,000 first home buyers will be able to buy a new home with only a 5% deposit, and 10,000 single parents were eligible to buy a home with only a 2% deposit.
The Government has also expanded the scheme that allows Australians to save for their deposit faster by depositing funds into their superannuation funds, at a lower tax rate.
So, what are these schemes and how do I apply.
FAMILY HOME GUARANTEE
The Family Home Guarantee will allow single parents with dependents to buy a new home with a deposit as small as 2%., and this isn’t restricted to just first home buyers.
This means, a single parent with kids can buy a brand new $500,000 home, with only $10,000 and the Government with guarantee the remaining 18% of the loan. This also allows the buyer to avoid pricey lenders mortgage insurance.
The scheme will be available from the 1st of July 2021 to 10,000 single parents over the next 4 years to single parents who earn up to $125,000 per year.
You can apply directly through your bank and for more information, check out the National Housing Finance & Investment Corporation website below for more information.
NEW HOME GUARANTEE
The Government is providing 10,000 new places over the next year for first home buyers to either buy or build a new home with only a 5% deposit.
You can apply directly through your bank and for more information, check out the National Housing Finance & Investment Corporation website below for more information.
FIRST HOME SUPER SAVER SCHEME
The Government is also expanding the First Home Super Saver Scheme, which allows Australians to rev up their savings buy depositing extra contributions into their superannuation funds.
The scheme will allow you to put at an extra $15,000 into your super each year, helping you save for your deposit faster, because the savings attract a 30% reduction in your effective tax rate.
From July 1st 2021, the Government will increase the amount Aussies can voluntarily add, from $30,000 to $50,000 and when you find a property you want, the money can be released from your super fund at the lower tax rate.
Please note, you must live in the home you buy for at least 6 months, and you can only withdraw the contributions you’ve made, not your regular contributions by your employer. You also have 12 months from the date you withdraw the money, to notify the tax office of your signed contract.
Contact your employer or Superfund to find how to make extra contributions.
This is incredible news for anyone wanting to get into property but may not have the deposit ready.
It’s also a great indication from the Government of the importance of the property market to Australia, and the ongoing support home owners and investors can expect to see in the future. With historically low interest rates and the rapid growth we’re currently experiencing, it’s never been a better time for active and soon to be investors, to buy that property faster!
