Mortgage is a type of loan where a real estate is been used as a collateral. Typically, it is used to finance a home (owner occupied) or an investment property. The borrower pays an initial deposit which normally varies from 10% to 20%. The mortgage in Australia is set up for 30 years. The borrower pays back the loan with the interest and principal, over a period of time through a series of repayments.
The Australian Government has announced few grants for home builders to assist them in purchasing or building new homes substantially to renovate their homes. The grants include
- First Home Owner Grant
- HomeBuilder Grant
FIRST HOME OWNER GRANT
The First Home Owners Grant (FHOG) was first introduced as compensation for the increased cost of housing following the implementation of the Goods and Services Tax (GST). The First Home Owners Grant is a one-off payment made to the person buying their first home in Australia depending on the state or territory. The first home can be a house, townhouse, apartment or unit. The amount paid for the home or the contract price should not exceed $750,000. The property must not have been previously sold as a place of residence, occupied as a home or used for short-term accommodation. It cannot be an investment property or a holiday house.
Eligibility:
- Must be at least 18 years of age. (Companies and trusts cannot apply.)
- Must be an Australian citizen at the time you apply.
- Should not have previously received a HomeBuilder grant in any state or territory of Australia.
- Person received grant should have annual taxable income below $125,000 for individual or $200,000 for a couple
- The home should be used as a principal place of residence after completion of construction or settlement.
- The contract signed between 4 June 2020 and 31 March 2021 to:
– Buy an off plan or new home valued at $750,000 or less (including GST) and construction had not started before 4 June 2020
– Build a new home where the build amount and the value of the land (including any existing structures) is $750,000 or less (including GST) or
– Substantially renovate an existing home where,
1. Renovations cost between $150,000 and $750,000 (including GST) and
2. Value of property (home and land before renovation) is less than $1.5 million.
*Please note that the First Home Owner Grant criteria varies according to the particular state or territory. The above mentioned are standard eligibility criteria.
HOMEBUILDERS GRANT
On 4 June 2020, the Australian Government announced HomeBuilder Grant to provide eligible owner-occupiers (including first home buyers) with a grant to build a new home or substantially renovate an existing home. HomeBuilder assists the residential construction sector by encouraging the commencement of new home builds and renovations.
On 29 November 2020, the Government announced an extension to the HomeBuilder program to 31 March 2021. On 17 April 2021, the Australian Government announced it would extend the construction commencement requirement from 6 months to 18 months for all applications (i.e for all contracts signed 4 June 2020 – 31 March 2021 inclusive).
Eligibility:
- Must be at least 18 years of age. (Companies and trusts cannot apply.)
- Intend to spend more than $150,000 for renovation purpose
- To build a new home, the property value must be less than $750,000
- If renovating the property, the home needs to be valued less than $1.5 million.
*Please note that the HomeBuilders grant criteria varies according to the particular state or territory. The above mentioned are standard eligibility criteria.
The Australian Government has made some recent amendments to the HomeBuilder program that includes:
- A $15,000 grant for building contracts (new builds and substantial renovations) signed between 1 January 2021 and 31 March 2021.
- An extended deadline for all applications to be submitted, including those applying for the $25,000 grant and the new $15,000 grant. This will apply to all eligible contracts signed on or after 4 June 2020.
- An extension to the construction commencement timeframe from three months to six months for all HomeBuilder applicants. This will apply to all eligible contracts signed on or after 4 June 2020.
- An increase to the property price cap for new build contracts in New South Wales and Victoria to $950,000 and $850,000, respectively, where the contract is signed between 1 January 2021 and 31 March 2021.
– The existing new build property price cap of $750,000 will continue to apply in all other States and Territories.
- A change in licensing requirements and registration for builders, as below:
- Where an eligible contract is signed on or after 29 November 2020, the builder must have a valid licence or registration before 29 November 2020.
- Where an eligible contract is signed before 29 November 2020, the builder must have a valid licence or registration before 4 June 2020.
Other than the above, the other existing eligibility criteria remains in place and the $25,000 grant will still be available for eligible contracts signed on or before 31 December 2020.
