The First Home Owners Grant
Copyright 2006 Tracey Anderson
The Australian federal government introduced the First Home Owner Grant (FHOG) in 2000 to compensate for the GST (goods and services tax) and to make buying a home easier for all Australians. Since that time, this popular grant has helped people in every state to buy their first home. As a result of this grant, as well as other economic factors, homeownership in Australia is now at an all-time high.
Depending on your lender, you may be able to use the $7,000 grant as part of your down payment. Not all lenders will allow it to be used in this way however, so if that is your intent, take the time to shop around and compare lenders. The mortgage market is highly competitive, and more lenders are starting to allow the grant to be used as down payment.
There may be circumstances where you may prefer to stay with a certain lender, even if that lender does not allow the funds to be used as down payment; for example, if the lender offers the most attractive interest rate, or lower fees than other lenders. Buyers must balance the cash they have available for down payment against these other factors that may make the loan less costly overall. Even if you do not use it as a down payment though, there are many other practical uses for the Grant. The process of purchasing a home entails many expenses. The Grant may be used to offset any of these expenses as the buyer sees fit. For example, you may use it to offset stamp duty or insurance, real estate agent fees or other mortgage-related costs, such as points or application fees.
The Grant is administered by each state or territorial government. Most first-time buyers will qualify for the grant; specific requirements are available online on the FHOG website (http://www.firsthome.gov.au/). Qualifications are very similar, regardless of your state. You must be a citizen or permanent resident of Australia, and you must be a natural person--in other words, not a corporation. Also, each applicant and applicant's spouse must not own, or have owned property in Australia in the past, even if it is property that is held with another individual. None of the applicants may have received the Grant previously. The Grant is meant for owner-occupants. Applicants must be buying the property for living in, and be prepared to occupy it within a year of purchase.
The Grant is not means-tested and is therefore available to all applicants regardless of income category. The grant is not taxable. In addition to the Grant, you may also be eligible for exemption from conveyance duty, depending on your state.
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Tracey Anderson is a mortgage broker specialising in helping Australian homebuyers find the right mortgage. For more information visit MortgageMall (www.mortgagemall.com.au).