$25000 Home Builders Grant can now be used as part of a deposit with some lenders
Earlier this year, as part of the governments, Covid-19 economic response, it was announced that a $25000.00 Home Builder Grant would be made available for new home builds or substantial renovations. They did this in order to stimulate a flagging Coronavirus economy by getting the building sector going again.
Like with any grant, there are requirements that need to be met to be eligible for this. You can read more in-depth about these requirements here. In a nutshell, though, the government has geared this towards working-class Australians and not your super-wealthy. Which I think is fair. They also have limited structural renovations to major renovations to the actual home you live in, not outbuildings, and nothing cosmetic. So no tennis courts or spa’ or pools etc are included.
The issue that we were experiencing from a finance perspective, though, was that these funds would be made available later and could not be used by any financial institution as funds to complete. This means the $25000.00 could not be used as part of an applicant’s deposit or savings to be used to complete the transaction. This has recently changed on a state by state basis, and South Australia has opted to accept these funds as funds to complete.
However, not all lenders have jumped on board with this, so it is not a blanket rule across the board. At least, though, the option is now there. Castle Mortgages are a mortgage broking firm based in South Australia, and we would be happy to assist you in going through your financial options with regard to this.
The new option to use the Home Builders Grant as funds to complete has opened the door a little wider for First Home Buyers who want to build their first home. Adding the First Home Buyers Grant of $15000.00 to the $25000.00 of the First Home Builders Grant they already have $40000.00 before any funds they may have saved. In essence, potential First home builders will still need to have saved the 5% genuine savings for most lenders to qualify for a loan, but their deposits have now been substantially bolstered.
There is a flip side to all of this in that stock of house and land packages has been snapped up. This has put negotiating for a good deal on the back foot. It also means that a fair few will not be able to find a home that will qualify. There is a time limit on when the build needs to start , which is three months after the contract was signed. Many builders are getting that busy that they cannot guarantee this start time and so are no longer offering the Home Builders Grant. In saying that, I still have clients who are successfully finding something, and hopefully, the government will step in and extend the grant and time frames.
There is quite a process as well with applying for the grant, and there are different steps that need to be followed in the right order. Basically, you need to have a contract before you can apply for the grant, which is scary in itself as you may not be sure that you will be able to get the finance unless you have already done a pre-approval. However, some lenders will not assess the deal until they know you have the grant and a contract. So it is a vicious circle.
It is always a good idea to talk with a finance professional to have an idea of your financial standing before moving forward with something like this. Castle Mortgages are Finance Brokers who serve Adelaide and the surrounding areas. We would love to have a chat with you about your specific scenario, so get in touch.
Please note, this is a blog and does not constitute financial advice. These are my opinions. Your financial circumstances are specific to you, and everybody varies. Before doing anything, you should seek professional advice from the relevant expert in that field.