Good news! First home buyers able to join forces
As evidence stacks up that property prices are trending higher1, first home buyers will be able to tap into new opportunities to purchase property.
The latest PropTrack Home Price Index for April 2023 suggests the property market has turned a corner, with home prices nationally rising 0.14% in April.2
While this likely won’t be welcome news to first home buyers, the expansion of three government support schemes could provide some help.
The First Home Guarantee3 and its regional equivalent, the Regional First Home Buyer Guarantee4, allow buyers to get into the property market with a deposit of just 5% (without the need to pay Lender’s Mortgage Insurance).
No cash changes hands. Instead, the Federal Government acts as guarantor for a borrower, allowing first home buyers to get into the market sooner.
What’s especially exciting, is that from 1 July 2023, the schemes’ definition of a “couple” will be expanded from a married or de facto twosome to “any two eligible individuals”.5
This can open opportunities for first home buyers to join forces and pool their resources. It could mean buying a first home with a sibling, friend or parent.
Eligibility will also change for the Family Home Guarantee, which allows single parents to buy a home with a 2% deposit.6 From 1 July 2023, the Guarantee will expand from single natural or adoptive parents with dependants, to include home buyers who are single legal guardians of children, such as aunts, uncles and grandparents.7
Another key change is that Australian permanent residents will be eligible for all three schemes in addition to Aussie citizens.8
Julie Colins, Federal Housing Minister, says these changes reflect the government “moving to meet the times”.9
She explains, “We know friends and family members are already teaming up to secure their own place to call home. Our actions will allow them to access vital assistance, just as couples have been able to previously.”
Why it’s important to speak with a broker
While these schemes are good news for first home buyers, buying with a friend or relative needs careful consideration and forward planning.
It can be helpful, for example, to consider how the upfront and ongoing costs of the property will be shared. Or, how co-buyers will handle the situation if one person wants to sell up while the remaining co-owner wants to hold onto the home.
Co-buyers may even want to consider having a formal agreement drawn up with the help of a solicitor. This way each person is clear from the start about how the arrangement will work.
Importantly, it makes a lot of sense to talk to a Mortgage Choice broker.
A broker can give accurate, personalised information on the co-buyers’ combined borrowing power, and provide expert advice on the different options for structuring a home loan.
Of course, a Mortgage Choice broker will also do the hard yards finding the loan and lender that is best suited to the combined needs of the buyers. The help of a broker is especially valuable when it comes to the low-deposit buying shcemes as not every lender has signed up to be part of these initiatives.
Contact your broker today
Could buying with a friend or sibling be your path to home ownership? In today’s market it can pay to think outside the square and consider all options.
In total, 35,000 places are available each year in the First Home Guarantee scheme; 10,000 places per year (to 30 June 2025) under the Regional First Home Buyer Guarantee; and 5,000 places per year (to 30 June 2025) under the Family Home Guarantee.10
With these schemes expanded to include more possibilities from 1 July 2023, it’s worth speaking to your Mortgage Choice broker today so you don’t miss out on an opportunity to access this assistance.
1 https://www.proptrack.com.au/home-price-index/
2 https://www.proptrack.com.au/home-price-index/
3 https://www.nhfic.gov.au/support-buy-home/first-home-guarantee
4 https://www.nhfic.gov.au/support-buy-home/regional-first-home-buyer-guarantee
5 https://ministers.dss.gov.au/media-releases/11036
6 https://www.nhfic.gov.au/support-buy-home/family-home-guarantee
7 https://ministers.dss.gov.au/media-releases/11036
8 https://ministers.dss.gov.au/media-releases/11036
9 https://ministers.dss.gov.au/media-releases/11036
10 https://ministers.dss.gov.au/media-releases/11036
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