What help can I find?
Now that you’ve set your mind on saving your home loan deposit and you’ve got a budget in place, the road ahead can look pretty long.
But you're not alone.
Here’s a quick overview of some of the programs that are in place to help you buy your first home.
First home owner grants
Many states and territories offer help to eligible first home buyers in the form of a grant. This can go a long way toward bolstering your home loan deposit. Each state and territory has its own rules regarding the types and value of properties eligible for the grant. The easiest way to find out if you’re eligible, and how much you might be able to get, is to take our quiz below.
Stamp duty concessions
Stamp duty is a tax imposed by states and territories on the sale of expensive items like real estate and vehicles. As we’ve discussed, it can add tens of thousands of dollars to the cost of a home loan. This means that when you’re saving your home loan deposit, you have to take stamp duty into account.
Fortunately, most states and territories offer some exemptions and discounts for first home buyers. That means if you meet the criteria for the state or territory where you live, you can either get a discount on the cost of stamp duty or avoid paying it altogether.
If you want to estimate what you might pay in stamp duty, you can use the calculator in part 1 of our guide.
The rules are different for each state and territory, but here’s a quick rundown:
The ACT has a lot of strings attached to its stamp duty concession, the Home Buyer Concession Scheme. First, the home has to be a new home or vacant block of land (off-the-plan apartments do count). Second, you have to meet an income test, which means if you make above a certain amount, you’re not eligible. This amount changes depending on the number of dependent children you have.
The duty you pay is also based on the value of the property. If it’s $470,000 or below, you only pay $20. This amount increases until the upper threshold of $607,000. Any property above this price isn’t eligible for a concession.
The ACT reviews its stamp duty rules regularly, and makes a lot of changes. For instance, stamp duty concessions used to be available for substantially renovated properties. As of 7 June 2017, that’s no longer the case. If you want to keep up to date, head over to the ACT Revenue Office website. Fair warning: It’s pretty confusing and you might just want to use our stamp duty calculator.
New South Wales
If you’re in New South Wales, stamp duty concessions are pretty straightforward. For properties purchased before 1 July 2017, any new home up to $550,000 is exempt from stamp duty, and there are discounts for new homes valued up to $650,000.
If you’re buying a vacant block of land, a block valued under $350,000 is exempt from stamp duty, and there are discounts for blocks valued up to $450,000. If you’re purchasing after 1 July 2017, the news gets even better.
The NSW Government announced that from 1 July 2017, stamp duty exemption would extend to established properties as well as new properties and vacant blocks of land. They also raised the value thresholds, meaning if you’re buying after 1 July 2017, any home under $650,000 will be exempt from stamp duty, and there are discounts for properties up to $800,000.
The Northern Territory has a couple of schemes available. For first home buyers buying an established property, the NT offers a stamp duty exemption on properties valued up to $500,000 and discounts for properties from $500,000 to $650,000.
For non-first home buyers purchasing a new home, the Principal Place of Residence Scheme offers a $7,000 rebate on stamp duty.
Queensland is pretty generous when it comes to stamp duty concessions. It offers concessions both to first home buyers and non-first home buyers. If you’re a first home buyer, you won’t have to pay any stamp duty on properties valued up to $504,999.99. For properties valued from $505,000 to $549,999.99, there are discounts available in varying price brackets.
For non-first home buyers, homes valued up to $350,000 are exempt from stamp duty. There are also concessions available if you’re building a home. Vacant lots valued up to $250,000 are exempt from stamp duty. Vacant lots up to $400,000 are eligible for a stamp duty discount.
South Australians have it tough when it comes to stamp duty. They pay some of the highest rates in Australia, and there are very few concessions available. Certain inner-city areas of Adelaide are eligible for concessions if you’re buying an off-the-plan apartment. Otherwise, you’re going to get slugged with stamp duty.
Tasmania is a bit stingy as well when it comes to stamp duty. There are no concessions available unless the property is being transferred between married people, people in a significant relationship or those involved in a caring relationship.
If you’re buying your first home in Victoria, as long as it’s your principal place of residence and valued between $130,000 and $600,000, you could be entitled to a 50% reduction in stamp duty.
If you have a dependent child and you’re buying a home up to $150,000 you’ll be exempt from stamp duty, with concessions available for properties up to $200,000. You can also get concessions for buying off-the-plan properties.
If you’re buying after 1 July 2017, there are even better concessions available. If you’re buying a new or existing home valued up to $600,000, you’ll be completely exempt from paying stamp duty. If the property is valued between $600,000 and $750,000 there will be exemptions available based on a sliding scale.
If you’re a first home buyer in Western Australia, you’ll be exempt from stamp duty if you buy a home for below $430,000. Homes costing between $430,000 and $530,000 are eligible for a stamp duty discount.
For more in-depth information about programs for first home buyers, check out our State-by-state guide to the first home owner grant.
Super saver accounts
Remember in Chapter 2 when we discussed using superannuation for a home loan deposit? While you can’t dip into the superannuation you’ve already saved, a new scheme means your superannuation can actually be put to work to help you save your deposit.
The Federal Government recently launched the First Home Super Saver Scheme. Under this scheme, starting 1 July 2017 you can make voluntary salary sacrifices into your super for the purpose of saving a home loan deposit.
You’re allowed to salary sacrifice up to $15,000 per year, and $30,000 total. The benefit of this is that the contributions you make are taxed at 15%. In all likelihood, this will be a much lower rate than the marginal rate at which the rest of your income is taxed.
The earliest anyone can withdraw from the scheme is 1 July 2018. Once you do withdraw, the savings are taxed at the marginal rate, minus a 30% offset. If your superannuation fund has gained in value since you started making Super Saver contributions, the earnings on your Super Saver will be calculated at the 90 day Bank Bill Swap Rate plus 3%.
If this all sounds confusing, don’t worry.
The gist of it all is that you can have money taken directly out of your pay and put into a special account to help you save for a home loan deposit. This money is taxed at a lower rate than the rest of your income. Because of this, when you withdraw the money you’ll likely come out ahead in comparison to the same amount deposited in a traditional savings account.
How far ahead are you likely to come out? Fortunately, the government has provided this handy calculator to estimate how much better off you’ll be putting money into your Super Saver account.
Another benefit of the Super Saver Scheme is that it eliminates the danger that you’ll end up using your deposit funds for some other purpose. The funds come out of your pay before that pay goes into your account, so you don’t have to worry about setting the money aside. And because it’s in your super account, you can’t touch it for any purpose other than a home loan deposit.
There are a couple of drawbacks. First, your employer has to offer salary sacrificing for the scheme to be straightforward and simple. If your employer doesn’t offer salary sacrificing, or if you’re self-employed, you can still make voluntary contributions, but this takes a bit more discipline.
The other downside is that the $30,000 maximum is unlikely to be enough for a deposit on its own. You’ll most likely still need to build a budget and discipline yourself to save. The First Home Super Saver Scheme is a good way to supplement your regular home loan deposit savings, not replace them.
Keystart and HomeStart
If you live in Western Australia or South Australia, there are a couple of unique options that could help you get into the housing market. Keystart is an initiative sponsored by the WA government, while the South Australian government sponsors HomeStart.
Keystart has a variety of low deposit solutions to help Western Australian homebuyers. The organisation has low-deposit home loans specific to the Perth metro area, some with deposits as low as 2%. It also has loans geared toward buyers in regional areas, solo parents, indigenous Australians and borrowers on the Disability Pension. The loans are income tested, so head to Keystart's website to see if you're eligible.
HomeStart offers low-deposit home loans to eligible South Australians. Borrowers who qualify may be able to get into the property market with as little as a 3% deposit. The lender also has loans designed to boost buyers' borrowing power by up to $45,000. Just as with Keystart, HomeStart loans are income tested. Head to their site to see if you qualify.
So now you know the assistance that’s available to help you with your deposit, and you’ve figured out how much to save and how to go about saving it. In the next chapter, we’ll look at what to do with your deposit once you’ve saved it.
Other parts in this guide
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