The federal government announced the HomeBuilder Scheme last week. It’s another measure aimed at rebuilding the post-COVID-19 Australian economy.
Here are all your questions answered.
What is the HomeBuilder Scheme?
It’s a $25,000 tax-free grant to help you to:
- build a new home to live in, or
- to substantially renovate your existing home.
What are the eligibility criteria for the HomeBuilder Scheme?
If you’re buying a new home, your income needs to be below the following thresholds:
- Couples (married or de facto): a combined income of less than $200,000 per year.
- Singles: less than $125,000 per year.
You also need to:
- be over the age of 18,
- an Australian citizen,
- be building a home that’s worth less than $750,000, and
- have your building contract in place before December 31, 2020. Work needs to commence withing 3 months of the contract date
If you’re undertaking a renovation to your home, the same income, age, citizenship and date thresholds apply. However, the value of your renovation must be between $150,000 and $750,000. In addition, the home you’re renovating must be worth less than $1.5 million.
What type of home can I build with the HomeBuilder Scheme?
You can use the HomeBuilder Scheme for any dwelling type, including:
- freestanding houses
- off-the-plan apartments
- townhouses
Are any types of renovations excluded from the HomeBuilder Scheme?
Yes, your renovations must improve the “accessibility, liveability and safety of your property”. By definition, this excludes items like pools, sheds or tennis courts from being eligible to be included in the HomeBuilder renovation contract amount.
Can you use the HomeBuilder Scheme for investment properties?
No, you can only use the Scheme for owner-occupier properties.
Can you use the HomeBuilder Scheme if you are an owner-builder?
No, you cannot use the Scheme if you are building your own home yourself. You must enter into a contract with a licensed third-party builder to be eligible.
Can you use the HomeBuilder Scheme in conjunction with the First Home Owners Grant?
Yes, provided you’re eligible for both.
The First Home Owners Grant (FHOG) in Victoria is:
- $10,000 for eligible applicants in Melbourne, and
- $20,000 for eligible applicants in regional Victoria up until 30 June, 2021. After that date, it is scheduled to revert back to $10,000.
Can you use the Home Builder Scheme in conjunction with the First Home Loan Deposit Scheme?
Yes, provided you’re eligible for both.
The First Home Loan Deposit Scheme can help you to build a new home sooner and avoid the cost of lenders mortgage insurance (LMI). Provided you can raise at least a 5% deposit, the government will guarantee the difference between your deposit and the 20% that lenders require to waive the need for LMI.
Lenders typically charge LMI if your deposit on a home loan is less than 20%. The cost of LMI depends on the amount you need to borrow and the deposit you can provide, but can cost more than $10,000 on an average-sized mortgage.
The First Home Loan Deposit Scheme is available for the first 10,000 eligible applicants from July 1, 2020.
Can you use the Home Builder Scheme in conjunction with the First Home Super Saver Scheme?
Yes, provided you’re eligible for both.
The First Home Super Saver Scheme allows you to withdraw up to $30,000 of voluntary additional super contributions as a deposit for your first home.
Normally, you can’t withdraw your super until you’re at least 55 and you have met a condition of release, such as retiring from the workforce. However, this restriction doesn’t apply to first home buyers.
How do you apply for the HomeBuilder Scheme?
You can apply for the HomeBuilder Scheme in Victoria through the State Revenue Office.
How we can help
At ARG Finance, our experienced team of home loan brokers can help you to get a construction loan to build a new home or a renovation loan. We’ll take the time to understand your individual circumstances so we can provide you with appropriate advice.
We can also help you with other types of loans, including investment property loans, refinancing, bridging loans and business loans.
Contact us today for an obligation-free chat to find out how we can help you!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.