With the increase in demand for housing in Australia continuing to drive property prices up, it’s no wonder first home buyers are running scared. If you – like the majority of Australia’s younger citizens, – are watching the expensive property market wondering how you can possibly afford to break into it, we’re here to tell you it’s not as impossible as you may think.
Australia’s First Home Super Saver (FHSS) Scheme
As of 1 July 2017, the Australian Government introduced The First Home Super Saver (FHSS) scheme. Designed to reduce housing affordability pressure, this scheme allows you to save money inside your Superannuation fund for your first home! This will provide first home buyers the ease of faster savings, alongside superannuation concessional tax treatments.
This scheme works by allowing those who want to save for their first home purchase to make voluntary contributions into the super fund of their choice. According to the Australian Taxation Office (ATO), the following two restrictions apply for those using the First Home Super Saver (FHSS) scheme to purchase their first property:
- You either live in the property you wish to purchase, or intend to as soon as possible.
- You intend to live in the property for at least six months of the first 12 months you own it (after it is practical to move in).
All ages are welcome to begin saving, but only those over 18 can request a release of their contributions. From 1 July 2018, those who have made contributions to their super as part of this scheme will be eligible to apply for the release of these funds.
Make sure to check out the ATO website to see if you are eligible for the First Home Super Saver (FHSS) scheme. Eligibility for this scheme is assessed on an individual basis, which means couples, siblings, friends and family can each assess their own eligibility and make contributions to purchase the same property! Even if you have previously owned property within Australia you may still be eligible to the First Home Super Saver (FHSS) scheme, if you have suffered financial hardship that resulted in the loss of your ownership of property.
To begin saving and to start your journey towards your first home purchase, contact the Australian Taxation Office (ATO) today and apply for the First Home Super Saver (FHSS) scheme! It’ll be the first step you take towards the biggest step of your life!
NU-DEV’s Top 4 ‘Buy Your First Home’ Strategies
1. Keep Doing Your Research
If you want to break into the property market and purchase your first home, then you need to know how to find, buy and pay for a property. This means, understanding how to research the property market. You need to know how to research an area, what type of investment will suit you, what price point you are looking at and what a great deal looks like when it’s staring you in the face. You need to know how mortgages work, what additional costs a property purchase might entail, what the better lenders are and how the interest rates will impact your repayments.
Most importantly, you need to know what constitutes a good house and what constitutes a great one. You need to have a relative idea of home’s values prior to making an offer, otherwise you’re probably going to spend too much and lose out on any resale value. It is essential that you know all of these things and more before buying a property. Knowing them can help you find exactly what you’re looking for faster and easier, and help make the leap into property ownership a little easier and a whole lot less stressful.
2. Seek Advice
Don’t be afraid to ask for advice, both from people with experience investing in property and professionals. Family and friends are a great place to start, then from there seek out bank managers, mortgage brokers, real estate agents and other property professionals. There’s no such thing as too much property knowledge, so don’t be afraid to ask for help.
3. Consider Other Options
You may have a dream home location all picked out, but if the area simple isn’t affordable at this stage then it’s time to consider other options. Start researching more affordable areas or start looking at apartments instead of homes. A great option might be investing in a more affordable property outside of your desired location, but renting and living in your desired neighbourhood. This option lets you step into the property market, while still allowing you to live in your ideal area. Another option, say if you are determined to own a home not a unit, is to organise a renter for one of the rooms. Some lenders may be more willing to lend more if you have a rental income lined up with the purchase.
4. Budgets Are Your Best Friend
If you haven’t already done so, set yourself a budget. If you don’t know how to budget, get help! If you can appropriately balance your expenditure and income with leftover savings being the goal, then saving for your first home purchase is going to be a lot easier to achieve than you originally thought. If you are spending more than you earn, than you need to reassess the way you spend or find new ways to increase your income.
Savings should always be a goal, not a bonus. Correct budgeting is not going to happen all at once, some trial and error is involved. Which is why it’s so essential that you start as soon as possible. When you see what you can potentially be saving each week, month and year, buying a home won’t feel as impossible as it once did.
Ultimately, buying a home for the first time has many challenges, but it’s not impossible to achieve. If you are committed, there are many strategies available to you that can help make home ownership a possibility much earlier in your life than you planned.