Australian Federal Budget Update will Benefit New Home Buyers
Introduction
The Australian Federal Budget has been released for 2022 to 2023 to deal with the increased cost of living as the pandemic, the conflict in Ukraine and global warming are putting pressure on the cost of goods and logistics.
The federal budget has updated the Home Guarantee Scheme and launched the First Home Super Saver Scheme to enable Australians to own a home sooner.
Background
As Australia faces labour shortages and a price increase in building materials in the construction industry, prices for houses have skyrocketed, this has priced out most people looking to be first home buyers.
In some places, such as Sydney, it could take more than eight years to save for a house deposit. If you do not have a 20% deposit, you would be slapped with paying the Lenders Mortgage Insurance on top of your loan. So in this year’s federal budget, the government seeks to resolve these two issues albeit temporarily. The first is to help homeowners to save up for a deposit and the other is to guarantee your home loan.
First Home Super Saver Scheme (FHSSS)
In order to help Australians to boost their savings for a home deposit, they have launched the First Home Super Saver Scheme (FHSSS).
What this does is that it allows Australian tax residents to set aside part of their income before tax into a deposit inside their superannuation account. These funds will normally have a much higher interest rate compared to a traditional savings account and can only be withdrawn for the purposes of a home deposit. This helps a soon to be homeowner, with 2 major benefits, the first is a higher interest rate for savings and the second is to reduce their taxable income.
From the 1st of July, 2022 the maximum amount that can be released under the FHSSS will be increased from $30,000 to $50,000.
Home Guarantee Scheme
The second very important feature of the federal budget is to guarantee your home loan through the Home Guarantee Scheme. So what does this do? Under this scheme, eligible first home buyers will be able to build or purchase a first home sooner as this scheme provides a guarantee to participating lenders for up to 15 per cent of the property purchase price. This means that home buyers could enter the property market with only a 5% deposit without having to pay for Lenders Mortgage Insurance. The federal budget also aims to increase the number of places for this scheme to 50,000 per year.
If you are a new or soon to be a homeowner and are a little confused about where to start, give us a call and let’s see how we can help you out with this. Leonard can be contacted by mobile at 0433 068 970 or email at [email protected]
