Sep 22, 2020 11:31:20 AM

HomeBuilder Confusion Drives First Home Buyers to Mum and Dad

Topics: Mortgage Broker, Buying and Selling Property, Home Loans 0

While Government’s $25,000 HomeBuilder Grant has already been snapped up by many Australians planning a new home build or a substantial home renovation, first home buyers looking to use Homebuilder to enter the property market, have been left feeling frustrated at not being able to factor the grant into their loan application. If you’re in a similar situation, we have some tips on what to do.


Government’s HomeBuilder Grant

Earlier this year, the Federal Government announced it would give eligible Australian homeowners a $25,000 grant to go towards a new home build or a substantial renovation of an existing home in the form of the HomeBuilder grant.

While the HomeBuilder grant was not initially designed with first home buyers in mind, a growing number of first home buyers want to use the $25,000 HomeBuilder grant combined with their State’s First Home Owners Grant to substantially improve the amount of deposit they hold and get into the property market sooner.

But, unlike the First Home Owners Grant (FHOG), lenders have not been made appointed agents for the grant so are not able to factor the grant in to new loan applications. What’s more, the grant is not available up front, which means borrowers have to incur the cost first and then apply for the grant in retrospect.

As a result, many first home buyers are turning to the Bank of Mum and Dad once again, to help make up the shortfall.

Changes to the Grant

Mortgage brokers are calling for a change to how the grant is administered, asking for the process to be more closely aligned with the way the First Home Owners Grant is handled, to give lenders more confidence in accepting HomeBuilder as part of a new home loan application.

If the process were handled in a similar way to the FHOG, borrowers would be able to show lenders that they’re in a position to use the $25,000 grant as part of their funds, effectively reducing their loan-to-value ratio and, in some cases, negating the need for lender’s mortgage insurance.

Higher loan-to-value lending generally adds on extra mortgage costs and typically comes with a higher interest rate, severely disadvantaging or even restricting first home buyers from entering the market.

A Solution in the Meantime

Until changes are made to HomeBuilder, first home buyers are being urged to find other means of funding up front. This could be in the form of a gift from a family member or a personal loan to cover the shortfall.
But, as with all things financial, before taking any of these steps, it’s vital you seek sound financial advice about your unique situation.

Talk to one of our team of mortgage brokers to find out if you qualify for HomeBuilder or to see how you can use a gift from a family member to fund the purchase of your first home.


While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

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