House & Land
Better than a gift basket: what the Government will pay you to build a...
This is the grand-daddy of grants available to people building a home in Australia in 2020. It’s a $25,000 cash grant provided by the Australian Government to incentivise you to build a new home in the time of COVID.
There are conditions. For example, it’s means tested; you can’t be earning more than $125,000 a year if you’re a single applicant, or over $200,000 if you’re a couple. Building needs to start within three months of signing the contract, and you need to start building in 2020.
If you can meet those conditions however, this is a big chunk of change to get back into your pocket. Applications for this grant need to happen after the contract is signed – and the number of grants is capped – so the smart advice is to move quickly to give yourself the best chance of securing the $25k.
The First Home Owners Grant (new homes) scheme
If this is your first house purchase in Australia, the NSW Government will give you $10,000 to use as part of your deposit.
If you’re building a new home, the combined value of house and land needs to come to less than $750,000 in order for you to access this Grant.
There are rules, however: for example, you can’t have received a similar grant in Australia before, and you have to live in the property after it’s complete and stay there for at least six continuous months.
You access the First Home Owners Grant through your lender, when arranging home finance. They should automatically check eligibility on your behalf – but if they haven’t, get them onto it.
You can find out more about the First Home Owners Grant here.
First Home Buyers Assistance scheme
This scheme helps buyers out with transfer duty costs. Transfer duty – which used to be called stamp duty – is a tax you pay when you buy property.
If you’re buying vacant land to build a new home on, there are a couple of opportunities to look for under this scheme.
First, there’s the transfer duty paid on the land itself. If you land costs less than $350,000, you won’t pay any transfer duty if you’re eligible for this scheme. It the land is valued between $350,000 and $450,000, the NSW Government will give you a discount.
Secondly, there’s the transfer duty paid on the house you build. If the total cost of the build is less than $650,000, you won’t have to pay any transfer duty under this scheme. If it costs between $650,000 and $800,000, you can apply for a transfer duty discount.
The rules here are similar to those under the First Home Owners Grant scheme. You’ll find more information here, along with a calculator to help you figure out what sort of discount you can get on land worth more than $350,000.
Instructions on how you apply for assistance under this scheme can be found here. After you’ve filled out the forms, the solicitor or conveyancer who is helping you with the purchase will lodge them for you.
First Home Loan Deposit Scheme
When you buy or build a home, lenders generally require you to have saved a deposit of 20 per cent of the total value of the home or new house and land – which means borrowing the remaining 80 per cent. Some lenders will be prepared to lend you up to 95 per cent of the value of the property; in doing so however, they will require you to take out Lender’s Mortgage Insurance (LMI).
This insurance protects the lender in the event you can’t service your home loan. It’s expensive over time, adding to the cost of your regular home loan repayments.
As an incentive for people to buy their first home, the Morrison Government introduced the First Home Loan Deposit Scheme in early 2020. This scheme is designed for people who have saved at least 5 per cent of the value of the home they want to buy, but don’t have the full 20 per cent required to avoid taking on LMI.
Under this scheme, the Australian Government will make up the shortfall between what you’ve saved for a deposit, and whatever’s required to get you to 20 per cent. There are no costs or repayments associated with the scheme itself.
Conditions apply to this scheme, similar to the requirements under the HomeBuilder Grant.
When this scheme was initially introduced, the first 10,000 spaces were filled within weeks. A second round of 10,000 places will be released on 1 July 2020.
Applications for the scheme are made by your lender on your behalf, as part of your loan application process. If you’d like a chance of securing one of these places, and haven’t already started the process of investigating home finance, speak to our in-house mortgage brokers, Mint Loans. They’re excellent at this stuff and will help you build smart.
What does this all add up to?
These schemes combine to:
1. Reducing what a first home buyer in NSW needs to save for a deposit ($10,000 First Home Owners Grant in NSW, plus the up-to 15 per cent provided under the national First Home Loan Deposit Scheme).
2. Elimination or reduction of transfer duty (stamp duty) on both new land and new home builds in NSW.
3. The $25,000 HomeBuilder cash grant for people building a new home in 2020.
That’s a lot of reasons to move quickly on building your first home.
Thrive Homes has a range of new house and land packages ready to go, and our processes are designed to help you move fast – which is perfect for anyone hoping to take advantage of all of these government incentives.
To get started quickly, get in touch now.