Budget 2021–2: Helping you buy a home and pay it off sooner
All of the brokers at Mortgage Broker Group were glued to the TV last Tuesday as Josh Frydenberg brought down his third Federal budget. As expected, there were a couple of announcements designed to reduce the difficulty many people (and especially people on lower incomes) have saving a deposit for their first property.
Most people who are able to purchase a home then hang onto it, and as property increases in value, they end up better off overall. The trick is saving that crucial first deposit.
The New Home Guarantee
The FHLDS, known as the New Homes Guarantee, is is a limited program aimed at helping single-parent families (there are a million of them in Australia) purchase a house with much less than the standard 10-to-20% deposit.
The scheme runs over four years and the offer will be available to 10,000 people. That’s just 2,500 a year, so the more you can save and pay down debt before applying, the better chance you’ll have.
Here are some details:
- The scheme kicks off on 1 July 2021
- To qualify, you must be an Australian citizen over 18 years of age and earning less than $120,000
- You must be a sole parent. Both women and men can apply.
- With just a 2% deposit, you can apply for the scheme – the government will guarantee up to 18% of the deposit (you pay it off over the life of the loan)
- People who are accepted won’t need to pay lenders’ mortgage insurance, so that’s another saving.
If you hope to apply for this scheme over the next few years, contact Mortgage Broker Group. We’ll help you get your finances in order to improve your chances.
First Home Super Saver Scheme
Every year, people are allowed to make extra payments into their superannuation accounts, on top of anything they might get from their employer. The amount you can contribute is indexed, so it goes up from time to time. At the moment, people can add up to $27,500 a year, which comes out of their taxable income. It’s basically tax-free savings. (Please seek the advice of a suitable industry professional for how these affect your own individual circumstances).
For the past four years, people have been able to access some of this extra money for the purposes of paying a home deposit. The budget announced the following changes:
- Previously people could access up to $30,000 from their voluntary super contributions
- The meant that couples could access as much as $60,000
- The recent budget increased the amount to $50,000 ($100,000 for couples)
- If you can make tax-free contributions to you super over the next few years (or you’ve already done so previously) a decent amount can be put towards that all-important deposit.
While we’re not sure how successful this one will be, the government announced in the budget a plan aimed at freeing up family-sized homes in the Australian market. The logic goes that if there’s more stock of existing family homes, it might take the heat off price increases and encourage families to enter the housing market.
It’s aimed at established homeowners who are nearing retirement and might be wanting to downsize to a smaller residence. Here are the details:
- The scheme was previously available to people aged 65 and over
- The scheme is now open to people aged 60 years and over
- If you sell a family home, you can make a one-off, post-tax contribution of up to $300,000 per person (or $600,000 per couple) to your superannuation
- You must have lived in the home for at least 10 years.
Talk to a broker
For more details about these budget announcements, and to discuss how to fast-track your entry into the housing market, contact Mortgage Broker Group. Our qualified brokers will help you find a loan that suits your personal circumstances. Best of all, our service is free to you.