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First Home Buyers Grant

Buying your first home can be one of the most exciting, challenging, and stressful parts of your life. There is a wide range of financial choices to consider and understanding all available options is the first step towards owning your own little piece of Australia.

A new package of measures has been developed by the NSW Government to increase housing affordability for fist home buyers across the state. These policies take into consideration the state’s growing population and the difficulty for first home buyers to enter the market. They also ensure housing developments are close to essential infrastructure including main roads, railway lines, shopping centres, and schools.

Who Are Considered Eligible First Home Buyers?

First home buyers are essentially anyone who has never bought property which was used as their own home. To be eligible for the First Home Owners Grant, is a requirement that you then remain living in your new home for at least 6 months.

What Is The First Time Home Buyer’s Grant?

While there are special loans available from banks and other lenders, the First Home Owners Grant (or FHOG) was originally created by the federal government almost 20 years ago to offset the effects of GST while easing some of the financial burden for first home buyers.

The NSW Government redefined how the FHOG works in 2017 so that anyone building their first home up to $750,000 or buying new up to $600,000 will be eligible for the $10,000 Grant. In some conditions, a new home can be defined as a home which has recently undergone substantial renovations.

Are There Any Exemptions?

First home buyers in NSW are additionally exempt from paying the insurance duty on the lender’s mortgage insurance. Depending on the circumstances, first home buyers will also be exempt from paying stamp duty for a new home worth up to $650,000, while the stamp duty for properties worth between $650,001 and $800,000 will be discounted on a sliding scale. First home buyers who purchase vacant land valued up to $350,000 will also pay no stamp duty, with a discounted stamp duty from $350,000 to $450,000.

Are There Changes To Stamp Duty?

The average stamp duty rate over the past 15 years increased from 3.37% to 4.05%, while the median house price rose from $400,000 to $1 million in Sydney. To counter this, stamp duty brackets have now been indexed to the Consumer Price Index (CPI) since 1 July 2019, which means that home-buyers will be able to put more money towards a deposit. While the initial savings will be quite modest, they will eventually become substantial in the long term.

What is the First Home Loan Deposit Scheme?

From January 1, 2020 the First Home Loan Deposit Scheme (or FHLDS) is expected to allow 10,000 people to buy their first home with only 5% deposit saved on a ‘first come, first served’ basis, and they will also be exempt from paying for the often mandatory lenders mortgage insurance (or LMI) for deposits of below 20%.

The FHLDS will be available for properties priced up to a maximum of $700,000 Sydney and regional centres in NSW like Newcastle or Wollongong, and a maximum of $450,000 in the rest of the state.

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