If you find yourself with clients enquiring about the latest changes and seeking accurate guidance to assist them, this is the blog for you!
As part of the 2023 Budget, the Federal Government has announced an expansion to the First Home Guarantee Scheme. Starting from 1st July 2023, the scheme's definition of a couple will be broadened to include family members or two friends living together.
What is the First Home Guarantee?
The First Home Guarantee is a government incentive enabling first home buyers to purchase their initial home with a 5% deposit and eliminating the requirement to pay LMI (Lenders Mortgage Insurance).
What is Lenders Mortgage Insurance?
LMI is a single insurance payment designed to safeguard the lender in case of default on home loan repayments. Typically, it comes into play when borrowing more than 80% of the property's value. However, with the First Home Guarantee, the Government steps in as a guarantor for the home loan, thereby eliminating the need to pay LMI.
So who is eligible?
Individuals with a taxable income below $125,000 and couples with a taxable income below $200,000 for the previous financial year are eligible for this scheme. When applying for a place in this program, it is essential to provide the relevant Notice of Assessment from the Australian Taxation Office (ATO).
Prior to 1 July 2023, applicants must be Australian Citizens, aged 18 years or over. From July 1 2023, the scheme will also be available to eligible borrowers who are Australian Permanent Residents.
Applicants must also prove that they have never owned or held interest in property in Australia. This includes commercial property, investment or company title properties.
So what else has changed?
Before July 1, 2023, the eligibility criteria for couples applying to the scheme required them to be either married or in a de-facto relationship. However, starting from July 1, 2023, the rules have changed. Now, any two eligible individuals, which may include friends, siblings, or other family members, are allowed to apply together.
Prior Ownership
Proof that you have never owned or held interest in property in Australia before must be provided. This includes commercial property, investment or company title properties.
Citizenship
Prior to 1 July 2023, applicants must be Australian Citizens, aged 18 years or over. From July 1 2023, the scheme will also be available to eligible borrowers who are Australian Permanent Residents.
Are there any other rules?
The buyers will be required to move into the property within six months of owning the home and continue to live in that property for so long as their home loan has a guarantee under the Scheme.
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