How does the 2022 federal budget affect first home buyers?
5 min read
Can the 2022 Federal budget help me enter the property market?
This year’s federal budget was brought forward ahead of the upcoming election. From tax offsets to the slashing of petrol levies and even cash handouts to Australians receiving social security, there were certainly plenty of sweeteners on offer. And, first home buyers were not forgotten.
Read on to find out what might be in it for you.
What are the headlines?
The biggest announcement for first home buyers was that places in the First Home Guarantee scheme will be increased from 10,000 places a year to 35,000 – meaning more first home buyers can benefit.
The scheme allows first home buyers to purchase a property with just a 5% deposit without having to pay for lenders mortgage insurance (aka LMI). LMI adds to your loan repayments and is why we usually recommend our first home buyers have a 20% deposit plus costs.
But like with any good election sales pitch – there’s more…
Under the Family Home Guarantee, a further 5,000 places are available to single parents to buy their first home or re-enter the property market with only a 2% deposit and no LMI.
They are also introducing the new Regional Home Guarantee, offering an additional 10,000 places for those building or buying new homes in regional Australia from October 1. It’s designed to encourage construction outside of capital cities and is open to first home buyers as well as people who haven’t owned a property in five years.
What else might help me?
In good news for those saving or paying off a new mortgage, unemployment is forecast to fall even further to new record lows and wage growth is set to increase, albeit modestly. There’s also an increased tax offset of $420 available for low and middle income earners to help ease cost of living pressures and an expanded and more flexible paid parental leave scheme.
And while not in the federal budget, the Victorian state government is currently offering substantial concessions to first home buyers, scrapping stamp duty altogether for eligible buyers of homes of up to $600,000, and giving discounts for purchases between $600,001 to $750,000.
This can save you a lot of money, even more if combined with the above federal schemes if you’re eligible.
Is there anything I should be worried about in the budget?
While the budget was intended as a crowd pleaser, there are some potential pitfalls for first home buyers.
The expanded first home buyers schemes have the potential to drive up home prices, while the extra cash in the pockets of many voters may put upward pressure on inflation and interest rates over time – making it even more critical to secure the best available loan.
The schemes also come with a range of eligibility criteria, including limits on your income and the value of your future home, that can be difficult to navigate.
While we view the budget as a win for first home buyers, good advice has never been more important if you want to get ahead.