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New Home Guarantee Scheme (Basics and Updates for 2023)

Home-Guarantee-Scheme-2023

New Home Guarantee Scheme: Basics and Updates for 2023 

 

You probably have heard of the Home Guarantee Scheme, a government program that, in a nutshell, helps first-home buyers purchase a home with a lower deposit.  

The scheme is attractive to buyers because it offers three different guarantees: 

  • The First Home Guarantee: This guarantee covers up to 15% of the purchase price of a home, which means that first-home buyers can purchase a home with a deposit as low as 5%. 
  • The Regional First Home Buyer Guarantee: This guarantee covers up to 25% of the purchase price of a home in a regional area, which means that first home buyers can purchase a home with a deposit as low as 2%. 
  • The Family Home Guarantee: This guarantee covers up to 18% of the purchase price of a home for single parents with dependent children, which means that single parents can purchase a home with a deposit as low as 2%. 

 

home-guarantee-scheme-overview

 

Who is eligible? 

The scheme is designed to help first-home buyers who have not owned a property in the past ten years and is only available to Australian citizens and permanent residents who meet certain income and asset requirements.  

One of the changes for 2023 is that the government has announced that it will be expanding the eligibility criteria. The changes include: 

  • Allowing joint applications from friends, siblings, and other family members. 
  • Expanding the definition of single parent to include legal guardians. 
  • Making the scheme also available to permanent residents. 

 

The changes to the Home Guarantee Scheme will make it easier for more people to purchase a home, so it is a very useful tool for first-home buyers who are struggling to save a deposit. 

Here are some additional details about the changes to the Home Guarantee Scheme in 2023: 

  • Joint applications: From 1 July 2023, any two eligible individuals can apply for the First Home Guarantee Scheme. This means that friends, siblings, and other family members can now pool their resources to purchase a home. 
  • Expanded definition of single parent: The definition of single parent will be expanded from July 1 2023 to include legal guardians, including aunts, uncles, and grandparents. This means that single parents who are not married or in a de facto relationship will be able to access the Family Home Guarantee. 
  • Availability to permanent residents: The Home Guarantee Scheme will be made available to permanent residents from 1 July 2023. This means that permanent residents who have not owned a property in Australia in the past ten years will be able to access the First Home Guarantee and the Regional First Home Buyer Guarantee. 

 

The changes to the Home Guarantee Scheme are a positive step for first-home buyers, as it will make it easier for more people to purchase a home and get on the property ladder. 

 

What are the most significant benefits of the new Home Guarantee Scheme?

 

Some of the main benefits of the scheme are: 

  • Lower deposit: The Home Guarantee Scheme can help you save money on a home loan by reducing the amount of deposit you need to save. This can make it easier for you to get into the property market. 
  • No LMI: The Home Guarantee Scheme can also help you save money on Lenders’ Mortgage Insurance (LMI). LMI is a type of insurance that lenders charge borrowers who have a low deposit. The Home Guarantee Scheme can cover the cost of LMI, which can save you thousands of dollars. 
  • More affordable home loans: The Home Guarantee Scheme can make home loans more affordable for first-home buyers because the government is effectively sharing the risk with the lender, which can lower the interest rate on your home loan. 
  • Faster home purchase: The Home Guarantee Scheme can help you buy a home faster because lenders are more likely to approve your home loan application if you have a guarantee from the government.

 

If you are a first home buyer, the Home Guarantee Scheme is a great opportunity to save money on a home loan and get your feet into the property market sooner than you thought possible. 

 

What are the main misunderstandings about the Home Guarantee Scheme? 

There are a few main things that people don’t know or don’t properly understand about the Home Guarantee Scheme: 

  • The scheme is not a free loan. The government guarantees a portion of the loan, but the borrower is still responsible for repaying the full amount. 
  • The scheme is not available to everyone. There are income and asset limits that must be met to qualify for the scheme. 
  • The scheme does not cover all of the costs of buying a home. The borrower will still need to pay for things like stamp duty, legal fees, and home loan interest. 

 

It is important to understand these limitations before applying for the Home Guarantee Scheme to make sure it’s a good fit for your situation. The scheme can be a very helpful tool for first-home buyers, but it is not a magic bullet for all. 

 

What are the Home Guarantee Scheme’s limitations? 

 

Here are some additional things to keep in mind about the Home Guarantee Scheme: 

  • The scheme is limited to a certain number of places each year. 
  • The scheme is only available for new homes or newly constructed homes. 
  • The scheme is not available for investment properties. 

While limits still exist, the government has also increased the number of places available under the scheme.  

There will now be 50,000 places available under the First Home Guarantee, 10,000 places available under the Regional First Home Buyer Guarantee, and 10,000 places available under the Family Home Guarantee. 

 

How can you get ready to participate in the Home Guarantee Scheme? 

Here are some things you must carefully consider if you want to participate in the Home Guarantee Scheme: 

  • Your income and assets: You must meet certain income and asset limits to qualify for the scheme. You can find more information about the income and asset limits on the NHFIC website. 
  • The type of property you want to buy: The scheme is only available for new homes or newly constructed homes. You cannot use the scheme to buy an existing property. 
  • Your borrowing capacity: You must be able to afford the monthly repayments on your home loan. You can use a home loan calculator to estimate your borrowing capacity. 

 

If you are thinking about applying to the Home Guarantee Scheme, it’s highly recommended that you speak to a financial advisor to see whether the scheme is right for you.  

At Eakins Finance & Insurance, we’re ready to help you meet the requirements. Get in contact with our team to check if you are eligible and secure a spot with a lender.  

Act fast! Don’t miss your chance to take advantage of this scheme!

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