The Complete Guide for First Home Buyers Melbourne

complete guide for first home buyers melbourne

Did you know that almost 30% of owner-occupiers purchases are First Home buyers? If you are looking to purchase your first home, then now has never been a better time. That’s because you can secure a significant first home owner grant that can make your first home purchase more affordable than ever. At Borg Financial, we can help you learn everything you need to know about the first home buyer’s grant.

What is the First Home Owner Grant in Australia?

The First Home Buyer’s grant also known as FHOG is a government incentive program that provides financial assistance to first home buyers. This grant is available for newly constructed properties and to be built properties, this includes the cost of the land. Qualifying purchases must be at least 18 years of age, first home buyers with one member of the purchasing couple must be qualified as a permanent resident or citizen of Australia.

Home buyers that are eligible for a First Home Owner Grant can also be eligible for a stamp duty concession on homes or properties whose price falls below a certain threshold.

How does the First Home Owner Grant work?

The First Home Buyer’s grant is designed to help First Home buyer’s construct a house on their land or purchase a house and land package. When you find the property and apply for a loan, the lender or bank can process this form and lodge it to the SRO on your behalf. Once you have been approved for your grant by being provided with a UIN number, the funds depending on the lender can be used towards the settlement of the land as funds to complete or paid at the slab stage of the build.

How much is the First Home Owner Grant?

The maximum First Home Buyers grant in Victoria is $10,000. However, grants can vary in each state. Be aware that there is a maximum value for a home to qualify for the grant. The current home value maximum is $750,000 in Victoria.

If you are in the following categories, then you can potentially qualify for further concessions:

  • Pensioner
  • Off-the-plan buyer
  • Young famer

In order to qualify for the concessions above $600,000, the value of your home must be between $600,001 and $750,000.

What are the benefits for first home buyers?

There are a number of benefits that come with being a first home buyer. If you are considering the purchase of a home for the First Home, then consider these potential benefits:

1). Lower monthly payments vs renting the same home.

In many cases, your home loan payments will be lower than renting the same size home. This is due to the record low interest rates banks are offering. Some banks are even offering perks to first home buyers. While renting seems more like paying someone else’s mortgage off. Don’t get stuck in the rent trap. Save, save, save because you will need a deposit.

2). Build equity

When you own a home, you will be able to build equity in the property. This allows you to begin to build wealth for yourself and family. With this home equity, you will have some flexibility when it comes to potentially taking out loans for home renovations, debt consolidations or even another property purchase. Should you wish to sell your property, the sale plus equity increase minus the loan amount and fees is the difference you will have straight in your pocket.

3). Build credit

Owning a home will also make you more attractive to lenders. This can allow you to enjoy lower rates when it comes to secured car loans or personal loans. You are more likely to be approved for a lower interest rate as you are property backed and a lower risk to the bank.

4). Grants from the government

Finally, a first home owner in Australia will be able to enjoy a grant up to $10,000 in Victoria. This home owner grant will make it easier for you to build a property and begin to plant roots and build home equity. Including stamp duty concessions.

In addition to the grant, first home buyers can also receive Stamp Duty concessions. Currently, government tax is waived on a home purchased with a dutiable value of under $600,000 in Victoria. Home purchases with a dutiable value between $600,000 and $750,000 are eligible for a government tax concession.

Note that an exemption or concession is only available one time. If you or your partner has already received an exemption or concession in the past, then it cannot be used again.

5). Opportunity to own your home outright

Unlike enting, you can come to a point where you completely pay off your mortgage and hold the title to your property. This likely possibility can come faster with accelerated repayments on your debts. If you have the surplus to pay an extra $100 or more per week on the loan, you could be shaving years off the loan term and pay it off much faster.

first home buyers melbourne

How do you obtain a First Home Owner Grant?

In order to receive a First Home Homeowner’s grant, you will have to meet the following qualifications:

  • You must be at least 18 years of age.
  • You must be a First Home homeowner as a person and not a company or a trust.
  • At least one of the applicants must be a permanent resident of Australia or a citizen.
  • You or your spouse must not have been a previous homeowner before 1 January 2000.
  • You must occupy the home within the first 12 months of purchase or construction and occupy the home for six months.

Once you have met the qualifications, you will need to find land and contract to have a new construction built on the land as a residential residence. Also, you can contract to purchase a unit or an apartment that is under construction or just completed and has not been previously occupied.

After finding the property, you should apply for financing. The financing company will apply for the first homeowners grant on your behalf with the State Revenue Office of Victoria. At the time of application, you will need to provide the proper documentation to show that the buyer and the property qualify for the grant.

Frequently Asked Questions

Chances are that you may have some more questions about the First Home Buyer’s Grant. Here are some answers to some of the most frequently asked questions related to the grant:

Q. What types of properties qualify?

You can purchase a home, unit or apartment. As long as the property is a new construction, then the property can qualify for the grant.

Q. Does the grant apply for all types of mortgages?

Yes. Any type of residential home loan has the ability to be eligible for the grant however some lenders have restrictions on fixed rates for construction purposes and prefer to be on a variable loan setup during construction.

Q. How long is the application process?

The application process for the grant can vary. However, the grant should be paid at around the time the foundation is laid on your property. In the case of the bank using this as funds to complete, a UIN approval number is required.

Q. When is the grant paid?

The grant is paid during the construction process when the foundation is laid or “at slab.” The grant can be placed towards payment of the land or the house itself by the lender. Only specific lenders can achieve this, Borg Financial can help navigate the lenders that will allow this.

Q. Can I qualify for the grant if I am not an Australian citizen?

The grant is available for Australian and New Zealand citizens as well as permanent Australian residents.

Q. Do I have to pay back the grant?

No. The first home buyer’s grant is not a loan. Therefore, you do not need to pay it back.

Q. Do I need to report income and pay taxes on the grant?

You do not need to report the grant as income nor is the grant taxable.

Q. Can the property be used as an investment property or a holiday house?

No. The property cannot be used as an investment property or a holiday property. The home must be a principal place of residence in order to qualify for the grant.

Q. Are first home buyers Melbourne eligible for the grant?

Yes! The grant is available throughout Australia for all Australian citizens.

Getting a First Home buyer’s grant

Take advantage of the First Home buyer’s grant today. This is an excellent opportunity to own property and lock in a lower monthly home payment while receiving a significant grant from the government. If you would like to learn more, contact Borg Financial. We are a top mortgage broking firm that specialises in first home buyers. We are experts at facilitating first construction loans, house and land packages as well as knockdown rebuilds. Our team makes it easy for you to get competitive rates on construction loans as well as loans for newly established properties. Contact us today.

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