Financing your first home
We understand that financing your first property might be confusing, which is why we’ve put together the ultimate guide to help! Summarising the government support available across Australia, this guide will break down everything you need to know about financing your first home.
If you’ve recently tried looking for a rental in WA, you don’t need to read the headlines to know that the vacancy rate is at a record low and rents are rising at an eye-watering rate. However, there is a silver lining: WA is the most affordable state for home buyers. To help people get out of the rental market and into their own home, the Western Australian Government offers a $10,000 First Home Owner Grant (FHOG) for new homes.
Do you qualify for the Western Australian First Home Owner Grant?
The key criteria for this grant is in its name – first home. If you’ve never owned residential property in Australia before, you qualify for the $10K top up to your budget. Better yet, it doesn’t matter how much you earn – the grant isn’t means tested.
What is missing from the grant’s name however, is the word ‘new’. The grant is only available if you’re buying or building a new home. Cedar Woods has a number of projects that qualify. The FHOG isn’t available on an established home, unless it has undergone a major reno in which most of the home has been replaced (think The Block-style transformation) and you will be the first person to occupy it after the work is complete.
If you can answer ‘yes’ to the following criteria, chances are you qualify for the FHOG:
- You’re 18 or over
- Either you or your partner (if applying jointly) are Australian citizens or permanent residents
- The home will be your principal place of residence
- You move in within 12 months of completion and live there continuously for at least 6 months (unless you have a valid exemption)
- This will be the first time you have owned a home in Australia
- Your home costs $750,000 or less (or $1,000,000 or less if you live north of the 26th parallel).
How to apply for the WA FHOG
The easiest way to apply is to get your bank or financial institution to lodge your application. If it isn’t an approved lender, or you don’t need finance for your home purchase, you can lodge your application directly with RevenueWA. Just ensure you do it within 12 months after handover of your new home. Whichever way the application is submitted, it is also viewed as seeking pre-approval for the first home owner rate of duty (FHOR) – another state government initiative to help you into your own home.
What other government assistance is available?
There are a number of state and federal grants and schemes on offer. When you combine them with the WA FHOG, that new home suddenly seems much closer. It’s important to discuss your individual circumstances with a mortgage broker who can advise you on the right way forward. A mortgage broker can also investigate whether you qualify for:
- First Home Owner Rate. As mentioned, this is a concessional rate of duty for first home buyers in WA. Unlike the FHOG, it also applies to both new and established homes up to $530,000 and vacant land up to $400,000. On the majority of the value of the home, you pay no stamp duty. Above the duty-free threshold ($430K for a house and $300K for land), you pay a discounted rate.
- First Home Guarantee. In this scheme administered by Housing Australia, the Australian Government goes guarantor on part of your loan, allowing you to buy a home valued at up to $700,000 with as little as a 5% deposit and no need for Lenders Mortgage Insurance. The scheme is limited to 35,000 places per financial year and your annual income must be under $125,000 p.a. for an individual or $200,000 p.a. for a joint application.
- First Home Super Saver Scheme. This scheme, administered by the Australian Tax Office, lets you save for a deposit by making extra contributions to your super fund capped at $15k per year up to $50k total . You pay less tax on super, however there are limitations on how much you can withdraw. The scheme is complex, so it’s best to speak to an accountant to see if it works for you.
Good things to know
There’s no more affordable state than WA to buy a home, and with house prices only likely to rise, there’s no better time than now. To help you familiarise yourself with how the process works, the terminology you’ll encounter, and your finance options, we’ve put together a helpful Guide For First Home Buyers. Happy reading – and house hunting.
