What can I get as a First Home Buyer?
Are you looking at entering the property market but do not know where to start? With all the different grants and concessions, as well as the First Home Saver Scheme it can be very daunting. Without the right know how you may miss out on thousands of dollars.
Let me start by breaking down the different incentives that are out there as they are different for the type of property you buy (new v established). Once you have a good grasp on what you can get then it is up to you to decide what type of property you want to buy.
First Home-Owners Super Savers Scheme – The government has now given you the ability to withdraw up to $30k of personal concessions to use as a deposit to purchase your first home if you are intending to live in it. This can be a newly built home or an already established home.
What does this mean? Basically, you can make additional voluntary contributions to your super (salary sacrifice or tax deductible personal contributions) which means rather than saving for your deposit with money that has already had tax taken out you can now increase your savings by only paying the contribution tax of 15% rather than your marginal tax rate.
Let us put this into context. Say John earns $60K per annum and he is currently saving $1000 per month. By the time that $1000 hits his savings account he has already paid $325 in tax. Now if John were instead to direct that same $1000 to his superfund he will only be paying $150 in tax meaning that for the same $1000 per month John gets to save an additional $175. Over the year that can add up to over $2k in tax saved for John which he can use for his deposit.
There is tax when it is withdrawn and this tax is John’s Marginal Tax Rate minus a 30% offset. So, if John takes out the 2 years of savings ($24K) he will pay $600 in tax. This is still over $3,400 better off for the 2 years just by utilising the scheme.
Now there are some things that need to be taken into consideration before you look at doing this:
The Ferderal Government’s new rules will guarantee 15% of the 20% deposit for 10,000 application per annum. This means that if you qualify you will only need to save 5% which could mean purchasing much sooner than you thought.
You will need to apply with one of the scheme’s partners which are more of the major lenders rather than second or third tier lenders so your application will need to be stronger. Speaking with a good mortgage broker will show you the best direction to take.
First Home Owners Grant - This is a national scheme to help first time buyers access the property market as well as stimulating the building economy. Each state provides a version of the scheme therefore it is good to investigate your state’s benefit.
In Summary - There is currently a lot of money you can get from the government right now if you play your cards right and if your goals for your first home align with all the existing grants and subsidies.
Remember though that property investment including purchasing a home to live in should always be considered a long-term investment. Therefore if the property you are looking at for the long term does not fit with the grants available then this should not be a factor in your final decision.
The information above is general information only and should not be taken as any form of financial advice as it does not take into consideration your personal circumstances. If you would like someone to provide you with a comprehensive financial plan incorporating the above, then please contact our office.
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Terrell Hyman the Director and Principal Advisor at Trl Financial Solutions.