With property prices continuing to rise, you may need a helping hand from the Government to buy your first home.
Dwelling values in Adelaide rose 1.6% in June, according to CoreLogic, to be up 13.9% over the 20/21 financial year, taking the median value to $508,712. First home buyers have been out in force of late in South Australia (SA), with 1,072 new loan commitments to first home buyers in March, according to the Australian Bureau of Statistics (ABS), the highest number since July 2009. First home buyers made up 32.3% of owner-occupier loan commitments for all dwellings in SA in May.
If you’re buying your first home in the Festival State, here’s a breakdown of the state government grants available to assist you.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
The SA First Home Owner Grant
Since the year 2000, almost 160,000 First Home Owner Grants (FHOG) have been paid in South Australia, for a value of over $1.5 billion. In the first 6 months of 2021, 2,461 grants have already been paid out, the biggest start to a year since 2014. In the 2020-21 financial year, 4,266 grants were paid out, worth a total $63.98 million. The greatest demand was seen in Mount Barker. So, how can you get in on the action?
How much can you get from the SA grant?
The South Australian FHOG offers eligible first home buyers a grant of up to $15,000 on the purchase or construction of a new residential home. There is no means test on income or assets to qualify for the grant.
Companies and trusts are not eligible for the grant. The first home owner grant for established homes ceased from 1 July 2014.
What are the price limits for the grant?
To be eligible for the grant, you must be building or purchasing a new home with a market value of $575,000 or less. This property could be a house, unit, townhouse, duplex, or off-the-plan apartments. There is no minimum purchase price. You are not eligible for the grant if purchasing an established home, but you may qualify if it has been substantially renovated. The grant can also not be used for land or renovations.
How do you qualify?
To be eligible for the grant you must:
Be 18 years of age or older.
Be an Australian citizen or permanent resident.
Not have held an interest in Australian residential property before.
Not have received a first home owner grant in any state or territory.
Reside in the home as the principal place of residence for a continuous period of at least six months. This must be done within 12 months of the date of settlement or the date construction is completed.
How do you apply for the SA first home owner grant?
Applications for the SA FHOG can be made through the RevenueSA website by completing the First Home Owner Grant Application and Lodgement Guide. You’ll need to provide information based on what your circumstances are, which will include:
100 points of ID (birth certificate, passport, drivers license).
Evidence you live in Australia (Medicare Card, debt/credit card).
Evidence of residential address (utility documents, insurance policies).
Evidence of relationship (if applicable).
Contract to purchase a new home or an off-the-plan home (if applicable).
Contract to build a home (if applicable).
Copy of all major receipts for building costs during the construction of the home (if applicable).
Applications must be made within 12 months of completing the transaction.
Alternatively, you can lodge your application through an ‘approved agent’. These are financial institutions, with your agent typically being the lender you’re borrowing from. You can find a list of approved agents here.
When will the grant be paid?
If applying through Revenue SA, the grant will be paid:
Within five days after approval of the application and evidence has been provided showing settlement has taken place when purchasing a new home or an off-the-plan home.
Within five days after approval of the application and evidence providing foundations have been laid, when you have a contract to build.
Within five days of RevenueSA approving the application and all evidence has been provided, if you’re an owner-builder.
If applying through an approved agent, the grant will be paid:
At the date of settlement, when purchasing a new home or an off-the-plan home.
On the date of first progress payment by Approved Agent, when you have a contract to build.
When an application with evidence has been provided to the Approved Agent, along with paperwork confirming the home is complete and ready to live in, if you’re an owner-builder.
It’s important to note there is only one grant available for one property transaction. So if you’re married or polyamorous, you’re still only eligible for one $15,000 payment.
Can you use the grant for a deposit?
RevenueSA states there are no requirements as to how you use the grant, therefore, you could use the grant for a deposit. However, with the median Adelaide property price sitting at over $500,000, the grant wouldn’t even cover a 5% deposit on a home of this price. Furthermore, if you want to avoid Lenders Mortgage Insurance (LMI), which can rack up into the tens of thousands, you’ll need a 20% deposit. Lenders also look favourably upon borrowers who have saved up their deposit themselves.
Can first home buyers get stamp duty discounts in SA?
There are no stamp duty discounts or concessions available to South Australian first home buyers. In fact, the Festival State is the only state or territory to offer no exemptions or concessions for anyone, and also boasts some of the highest taxes. Doesn’t sound like much of a festival, does it?
How much is stamp duty in SA?
According to RevenueSA, a property valued at the median Adelaide dwelling value of around $500,000 would pay over $21,000 in stamp duty.
What other SA schemes and grants can first home buyers use?
There are a number of federally-funded schemes and grants that when used in conjunction with the SA FHOG can add up to a considerable amount.
The New Home Guarantee
The New Home Guarantee was launched 1 January 2020, as the First Home Loan Deposit scheme, with the name changing in the 2021/22 budget. The scheme allows first home buyers to secure a home loan with as little as a 5% deposit, with the Federal Government providing the lender with a guarantee of up to 15% of the property’s value. This allows first home buyers to avoid paying LMI, which can easily amount to tens of thousands of dollars.
The scheme is administered on a first-come, first-served basis on 10,000 loans each year, for borrowers on owner-occupier loans making principal and interest repayments. It has varying price caps, is limited to new builds, and is only available from 27 set lenders.
The Family Home Guarantee
The Family Home Guarantee was announced in the 2021/22 Federal Budget and allows single parents to secure a home loan with as little as a 2% deposit, without having to pay LMI. Launched 1 July 2021, the scheme will be offered to 10,000 single parents over a four year period. It is restricted to owner-occupier, single-parent borrowers earning less than $125,000 annually and making principal and interest repayments, on loans 30 years long or less.
The First Home Super Saver Scheme
The First Home Super Saver Scheme (FHSSS) helps aspiring first home buyers save up a deposit via their super fund. It’s designed to accelerate their savings by at least 30% via income tax concessions and a deemed rate of return (currently 3.04% p.a.). First home buyers can contribute up to $15,000 towards the scheme in one financial year and withdraw a maximum of $30,000 (plus any earnings) from it overall, although this withdrawal limit is set to increase to $50,000 in July 2022.
Savings.com.au’s two cents
If you’re a first home buyer, chances are you’ll be happy to accept any financial assistance on offer. Although the $15,000 South Australian FHOG may not seem like a lot compared to property prices, when combined with other federal government grants and schemes, there is considerable financial help available. Consider consulting a financial adviser to see which schemes you may be eligible for.
Read more about First Home Owner/Buyer Grants:
- NSW First home buyer grants
- Queensland first home buyer grants
- VIC First Home Owner Grants
- WA First home buyer grants
Photo by Phil Graaf on Unsplash