Budget update for first home buyers

Budget update for first home buyers

This week’s Federal Budget contained a number of measures that will please some people and annoy others…so nothing new there.

The good news for those Victorians who are in the market for their first home, particularly those who are finding it difficult to save a full 20 per cent deposit, is that the Budget contained some measures that are likely to make life a little easier in the coming months.

It was announced on Tuesday evening that first-home buyers, along with single parents, will receive additional assistance to help them gain a foothold in the property market. This is due to the Government expanding a scheme that enables these people to purchase with a smaller deposit.

As we mentioned in a post back in January, the Home Guarantee Scheme enables aspiring homeowners to buy a property without having to save a 20 per cent deposit, (or to take out lenders mortgage insurance when they don’t). This year’s Budget announced that this program is being increased to assist 50,000 homebuyers each year for the next three years, which is more than double the number of places currently available.

The plan is to enable first-home buyers with a deposit as low as 5 per cent to buy a home, with the government providing a guarantee for up to 15 per cent of the purchase price. This will eliminate the need for lenders mortgage insurance, which can impose a substantial financial cost on market entrants.

Importantly, single parents who are looking to enter, or even re-enter, the property market will be able to buy with a deposit of just 2 per cent, via the Family Home Guarantee. This scheme has been expanded from 10,000 places over four years to 5,000 places each year.

In the past, first home buyers have been eligible to apply for the scheme as long as their taxable income does not exceed $125,000 per annum for single applicants, and $200,000 for couples. As far as we are aware, this limit has not changed. Keep in mind, this scheme is only applicable to those buying their own residence, not an investment property.

Of course, if you need any assistance in finding the right property for your first home, the team at Ian Reid Buyer and Vendor Advocates have a been assisting Victorians to achieve their property goals for decades. So, feel free to give us a call this week on 9430 0000 if you’d like to discuss your options.

And for those who are thinking of selling in 2022 you’ll also find plenty of helpful suggestions in our free booklet, “Fatal Real Estate Traps Exposed”.