If you’ve been hanging your head in defeat at the idea of owning a home in today’s economy, we have some exciting news for you!
Starting from July 1st, 2023, the government’s Home Guarantee Scheme is expanding the eligibility criteria to make it easier for thousands of people with the long-held Australian dream of owning a home to enter the market.
In recent times, the Australian dream has seemed like more of a pipedream with lenders tightening the purse strings, wage growth moving slower than inflation, and interest rates that have people clutching their chests with worry. But the upcoming changes to the government schemes we’ll explain below could help you get your foot through the door and onto the property ladder.
What Is the Home Guarantee Scheme
There are three types of guarantees within the government’s Home Guarantee Scheme:
First Home Guarantee
For eligible first home buyers, the First Home Loan Deposit Scheme (FHLDS) provides a guarantee for low and middle-income individuals and families to buy their first home with a deposit as low as 5% without the extra costs of Lenders Mortgage Insurance (LMI).
Regional First Home Buyer Guarantee
For eligible first home buyers, this initiative provides a guarantee for buyers looking to purchase their first home in a regional area to buy with a deposit as little as 5% without attracting LMI costs.
Family Home Guarantee
This scheme allows eligible single parents with dependents to apply for and obtain a mortgage with a deposit as little as 2% without attracting LMI with the government acting as guarantor. It’s accessible for both first home buyers, and single parents looking to either build or buy a home and get back into the property market.
Exciting Changes Coming July 1st
Rather than sifting through the media releases, budget documents, and news articles, we’ve laid out the changes to the Home Guarantee Scheme under the new 23-24 federal budget below:
- The First Home Guarantee & Regional First Home Buyer Guarantees will expand their eligibility from singles and de-facto couples to include family members, siblings and friends that can jointly apply and split the costs of a first home deposit
- The Family Home Guarantee will expand its eligibility from single parents to include single legal guardians of children such as siblings, aunts, uncles, and grandparents
- Australian permanent residents will become eligible for all three guarantees under the Home Guarantee Scheme
- The Home Guarantee Scheme’s eligibility will expand from first home buyers/builders to include non-first-home buyers who haven’t owned a property in the last 10 years
Things to Consider When Financing your New Home
It can be easy to get swept up in the excitement of owning a new home (and it is exciting!) It’s a big step and worthy of lots of consideration, research, and important decisions that could shape your future in homeownership. A few things you should consider when financing your new home could include:
What kind of home you’re looking for
- Are you looking for your dream home, or your entry-level home?
- Are you a family in need of lots of space?
- Will the home need room to grow along with you?
- Will the neighbourhood suit your lifestyle?
What your cashflow looks like
- How much deposit are you able to save to reduce the long-term interest on a loan?
- Do you have the income and financial security to match your new home purchase?
- Will you continue to have the ability to service your mortgage?
- Are there additional government initiatives or subsidies you could be eligible for?
What kind of home loan you’re looking for
- Have you spoken to a mortgage broker?
- Will you be liable to pay Lenders Mortgage Insurance (LMI)?
- Will your home loan be on a fixed or variable rate?
- Will your home loan be with a bank or alternative lender?
The new government changes to support first home buyers is an exciting step towards achieving the dream of homeownership, and Geelong Homes is right there with you when you’re ready to get started!
^ While we’ve tried to be as helpful as possible, this article should not be taken as professional financial advice. It contains general information only, and you should seek out independent, professional advice before making any financial decisions.
