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Are you looking to buy your first home under the First Homer Buyer Guarantee? We have compiled a list of questions you may have regarding this process in hopes to answer any and all questions you may have. If you have more questions about this process, book a consultation with our brokers, we are more than happy to guide you through this process.
Q. Do I have to pay back the National Housing Finance and Investment Corporation (NHFIC) in relation to my scheme?
A. No.
Q. Can I purchase a property from my parents?
A. No, not under this scheme.
Q. Do all participating lenders apply the same eligibility criteria for the guarantees?
A. The FHBG has its own eligibility criteria that is common amongst all lenders (outlined by the NHFIC), however, some lenders will have varying policy and external criteria for the scheme.
Q. Is stamp duty waived under the scheme? Is there a way to avoid paying it?
A. Stamp duty concessions are separate to the FHBG and managed by individual state governments. Each state has a purchase price cap for stamp duty concessions, this waiver can be used in conjunction with the FHBG.
Q. Can I apply for a loan with someone else? Friend/ Partner/ Family Member?
A. Couple applicants are only eligible for the guarantee if they are married on in a de-facto relationship. Applications of persons buying including siblings, parent/child or friends, are not eligible for the FHBG.
Q. Are Australian permanent residents or New Zealand citizens eligible?
A. Sadly, No. As a part of the FHBG eligibility criteria you (and your partner, if applying as a couple) must be Australian citizens with citizenship certificates.
Q. Can I apply as a single applicant even if I have a Spouse/ De-facto partner?
A. This will depend on yourself and your partners specific circumstances and would be a great reason to speak with a broker.
Q. Am I eligible to apply for the guarantee if I have been approved for Australian citizenship but haven’t had the citizenship ceremony?
A. No. You must be an Australian citizen and have received your citizenship certificate by the time of your home loan date. If you have only applied, are eligible or received notice of a positive Australian citizenship decision, you will not be eligible for the FHBG.
Q. I receive payments from Centrelink, can I still apply for the guarantee?
A. This will depend on the type of payment you are receiving and the policy of the lender you are applying through.
Q. What if I own or have interest in property in Australia?
A. Unfortunately, the eligibility criteria exempt those who have had or have interest currently in a property. This includes owning land in Australia, either joint or separately.
Q. I already own land. Can I use the guarantee to build on it?
A. If you already own land, you do not meet the eligibility criteria for the scheme. You must never have held interest in property in Australia.
Q. What if my personal circumstances mean that I have not received a notice of assessment (NOA) in respect of my taxable income?
A. Our team are happy to fully assess your financial position and can even lodge a placeholder application with the financier you intend to utilise for your application. Ultimately, your most recent NOA is a requirement of the scheme, so the financier will not be able to reserve a spot in the scheme until that stage.
Q. What are the property price caps in Brisbane? Are the property price caps flexible?
A. Within Queensland capital city and regional centres the property price cap is $700,000 for the rest of the state is $550,000.
Q. Is the price cap for land and build the total package, or just the build portion?
A. The price cap is for the total contract value.
Q. What is a scheme place reservation? How do I know if I have secured a place?
A. Your broker will let you know once a scheme place has been reserved and the relevant expiry date.
Q. What if I have a reserved place but decide to change participating lender?
A. If the new lender is willing to take on the reservation place, the scheme allows you to transfer lenders.
Q. What happens if my place reservation expires?
A. As long as there are still places available you can re-apply for a new spot. If there are no available spaces, you will need to re-apply in the next financial year.
Q. How long do I have to find a property? What happens when I do find one?
A. Your reserved place is open for 90 days, once you find a property you have 6 months from the settlement date to move in.
Q. Can I build my own home?
A. Yes, with a land and build package.
Q. When do I need to settle on a property?
A. Within 90 days, as allocated for the schemes reserved place.
Q. How long does the National Housing Finance and Investment Corporation (NHFIC) guarantee remain in place?
A. You will remain under the scheme until you reach 20% equity in your property, move out, request to be released through your lender, sell your property or refinance your loan.
Q. When do I need to move in?
A. You must move into the property within 6 months of the settlement on your home loan. However, this does not include ‘off-the-plan’ purchases, the timelines between these differ significantly. For a house and land package, you must start building your home within 12 months, and finish the build within 24 months of the settlement of your home loan. From there you will need to be moved into your property within 6 months of the occupancy certificate being issued.
Q. What happens if I need to sell my home or move out?
A. If you sell your home, your lender should automatically release you from the scheme. If you move out, you will have to refinance or change to an investment product with your existing lender. At this time, you will be released from the scheme and possibly required to pay Lenders Mortgage Insurance (depending on your LVR at the time).
Q. Can I get a pre-approval with a FHBG space? How long does a pre-approval last?
A. Yes! Generally, a pre-approval will last 90 days.
Q. Is there an income cap for FHBG?
A. Yes, though it differs from single to couple applicants. Single applicants with a taxable income of UP TO $125,000 per annum for the previous financial year. Couple applicants with a taxable income of UP TO $200,000 per annum for the previous financial year.
Q. What is LMI, and how can I avoid it?
A. LMI stands for Lenders Mortgage Insurance, which is a one-off, non-refundable or transferable premium that is added onto your home loan. It is calculated based on the size of your deposit and your borrowing amount So, the more you contribute to the purchase price of your property, generally, the lower your cost will be. LMI protects the bank against any loss they may incur if you are unable to repay your loan.
LMI can be avoided by FHB scheme, 20% deposit, or lender LMI waivers for specific occupations. Some lenders will also run promotions waiving LMI with certain deposit sizes.
Q. Is there a difference between buying a house and an apartment?
A. Yes, apartment purchases are generally subject to different lender policy and incur strata/ body corporate costs.
Q. What is body corporate/ strata?
A. This is a cost to maintain and insure your apartment building. As apartment building are owned by several owners within the one property, the cost to maintain and insure the property is shared between all owners.
Q. What happens if the property is tenanted when I purchase it?
A. If you are moved in 6 months after your settlement date, it is all good. If the property is tenanted when purchased it just means the tenants have until the date you need to be moved in, to move out.
Q. Is there any flexibility regarding genuine savings?
A. Some lenders have ways to convert gifted funds into genuine savings such as a 6-month rental ledger. The scheme always requires a minimum of 5% to be contributed to the purchase.
Have a listen to our most recent podcast episode where we get you up to speed about the First Home Guarantee:
Have any further questions after that list? Book a free consultation with our brokers here and get clarity on those questions: