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August 12, 2021

Parental Guarantee

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State
Amount
Conditions
ACT
n/a
From July 1 2019, the FHOG ACT has been replaced with exemptions on stamp duty(see below section 1.5).
NSW
$10,000
To be eligible, your first home must have a total value below $600,000, and beeither newly constructed or ‘substantially renovated’*. If you plan to build a newhome from scratch, you can still be eligible as long as your land plus the home youbuild have a combined value of less than $750,000.
NT
$10,000
Your income and the price of your home don’t affect the FHOG NT, and the grant isavailable if you buy or build a new house, apartment, duplex or townhouse.
QLD
$15,000
To be eligible, you need to buy a brand new home or build a home from scratch withthe total value (including the land) below $750,000. You may also be eligible if youbuy off the plan or an established home that’s been substantially renovated*.
SA
$15,000
You are only eligible when you buy or build a brand new home, the grant is notavailable if you buy an established home. You can choose from a house,apartment, townhouse or villa, but you will only be able to claim the FHOG SAif you pay below $575,000 for your home.
TAS
$20,000
You are only eligible when you buy or build a brand new home, the grant is notavailable if you buy an established home. The FHOG in Tasmania is currentlyavailable until 30 June 2022. Off the plan purchases are also eligible. In Tasmaniathere is no limit on the purchase price and the grant is not means tested.
VIC
$10,000
The FHOG is available if you buy a newly built home or if you choose to build a homefrom scratch in Victoria. Your first home can be a house, townhouse, apartment, or unitbut it must be valued at $750,000 or less, and it must be a new home – being sold asa home for the first time, and less than five years old
WA
$10,000
You are only eligible when you buy or build a brand new home, the grant is notavailable if you buy an established home. However, a home that has beensubstantially renovated* may be considered a new home. There are limits on whatyou can pay for your first home to be eligible. If you’re located south of the 26thparallel, which basically covers all the Perth metropolitan area, you can claim theFHOG WA if your new home is worth up to $750,000 – this includes the value of theland plus buildings. If you buy or build a home north of the 26th parallel, the propertymust be valued up to or below $1 million.

*Substantially Renovated means all, or most, of the building, has been removed or replaced. As a guide,substantial renovations include replacing or altering foundations or replacing or altering floors.

Guarantors – are they an option?

High property prices are seeing some first home buyers turn to parents and close relatives to act as a guarantor for their loan. It’s an option that can help you get into your first home sooner – but it also brings considerable responsibilities and risks.

What is a guarantor?

Many lenders will allow a related third party to provide additional security to help a family member buy their own home. The person providing this assistance is known as a guarantor.
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This is different to being a co-applicant or co-signer. A co-applicant will be included on the loan and will be responsible for the entire loan until such time as it is repaid in full. A guarantor, on the other hand, is linked to a loan by a guarantee.

This guarantee can be released and the guarantor’s responsibility stopped without the loan being repaid in full.

Who can be a guarantor?

Guarantors are generally limited to immediate family members. Normally, this would be a parent, but it can include siblings and grandparents. Some lenders will allow extended family members and even ex-spouses to be a guarantor to a loan, but this varies depending on the lender.


Benefits for first home buyer

As the Family Home Guarantee is offered by the NFHIC as an extension of the First Home Loan Deposit Scheme (FHLDS, not all properties will be eligible. This scheme holds the same property price limits as the FHLDS that can differ depending on your state.

Considerations for guarantors

While securing a guarantor might seem like a winning situation for you, it’s important to also consider the risks from the perspective of your guarantor.
Guarantors effectively offer to take on responsibility for the home loan if repayments can’t be met. So it’s not something to take lightly.
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It pays to consider how they would cope financially if the unexpected happens, and the lender turns to them to make good on the loan.
Their own financial wellbeing could be compromised – at worst, they could risk losing their own home.

Some lenders allow guarantors to impose a limit on the sum they guarantee. And, over time, they may be released from their role as guarantor as the loan is paid down or as the home equity rises.
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Anyone considering being a guarantor for a property loan is advised to seek independent legal and financial advice before accepting the role. In fact, most lenders will insist on this, prior to accepting
a guarantee.

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Other Grants

Family Home Guarantee

This new scheme announced in the 2021-22 Federalbudget allows single parents to be able to get a home loan with a 2% deposit, as the government’s scheme aims to support single parents with dependants (who are predominantly women) to enter or re-enter the housing market. Commencing on 1 July 2021, the Family Home Guarantee scheme will provide 10,000 places to eligible single parents over four financial years to 30 June 2025. Similarly, to the 5% deposit scheme, the family home guarantee is administered by the NFHIC and allows single parents to purchase an existing home or build a new property with a low deposit while avoiding LMI. Although this grant is not specifically for first home buyers, eligible first home buyers are able to apply.

References

See the complete list of state based references and resources for you to explore. Each state has their own individual requirements. However, thats why we are here to assist you on your journey of homes ownership.

Super Saver

The First Home Super Saver Scheme (FHSSS) helps Australians boost their savings for a first home by allowing them to build a deposit inside superannuation, giving them a tax cut. The FHSSS applies to voluntary superannuation contributions made from 1 July 2017. These contributions, along with deemed earnings, can be withdrawn for a home deposit from 1 July 2018. For most people, the FHSSS could boost the savings they can put towards a deposit by at least 30 per cent compared with saving through a standard deposit account as amounts saved through the scheme will only be taxed at 15% instead of your marginal tax rate, this can help you purchase your first home sooner.

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