What Labor's win means for first home buyers
Now that we know Labor has been returned, let's review what this means for first home buyers.
Here is a summary of the key election commitments from Labor. Bear in mind they now need approval from the new Parliament, so we have to wait for the outcome of that legislative process.
Expanded access to 5 per cent deposits for all first home buyers
Labor has promised to expand the First Home Guarantee scheme to allow more first home buyers to purchase with a 5 per cent deposit without having to pay lenders mortgage insurance (LMI).
Borrowers usually need a 20 per cent deposit to avoid LMI, which can cost tens of thousands of dollars and only protects the lender, not the borrower. Under the scheme, the government guarantees 15 per cent of the loan so the first home buyer can avoid LMI. Labor proposes to expand the scheme by removing current income caps, raising the purchase price caps and offering an unlimited number of loan guarantees. The changes would become effective next year.
Labor says 150,000 people to date have purchased their first homes using the First Home Guarantee.
Building 100,000 homes just for first home buyers
Labor also promised $10 billion to help build up to 100,000 new homes to be reserved for purchase by first home buyers only.
Labor's pitch was that this would mean first home buyers would not have to compete with investors, who often have bigger budgets and can afford to offer more at auction or in private negotiations.
Expansion of the new Help to Buy scheme
The Help to Buy shared equity scheme was passed by Parliament late last year after a long delay. Under the scheme, which is due to begin later this year, first home buyers can partner with the federal government to buy a home.
Buyers need a minimum 2 per cent deposit to participate in the scheme, with the federal government taking up to a 30 per cent stake in established homes or a 40 per cent stake in brand new homes.
Prior to the election, Labor announced it would raise the income and purchase price caps for the scheme so more people could take advantage of it.
The new income caps will be $100,000 for individual buyers and $160,000 for joint applicants and single parents.
Most of the new purchase price caps will be linked to the current median house price in each state and territory.
For example, in Victoria, the new price cap will be $950,000 in Melbourne and major regional hubs and $650,000 elsewhere in regional Victoria. The price cap for Sydney and major NSW regional hubs will be $1.3 million and $800,000 for other parts of regional NSW. The price cap for Brisbane and major regional centres will be $1 million and $700,000 elsewhere in regional Queensland.
Labor says more than 5 million properties across Australia are valued at less than the new price caps.
I encourage all first home buyers to explore the government help available to help you buy.
Remember, the policies above are federal. There are many other incentives on offer from the state and territory governments, too, such as stamp duty concessions and grants.
It will pay to do your homework!
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