Home Builder Grant. Zero Deposit Home Loans

Home » Home Loans » Smart Finance » Home Builder Grant. Zero Deposit Home Loans

The HomeBuilder grant

This grant provided by the Federal Government provides for a $25,000 tax-free grant given to eligible Home owner-occupiers, including first home buyers.

The grant can be used to:

Build a new home
Renovate an existing home

The HomeBuilder grant is a federal scheme designed to help the Australian residential construction market continue business in the wake of the Coronavirus.

What are the price limits for HomeBuilder?

Contract Limit.

A maximum Contract Price of $750,000 applies for the building contract for new homes.This includes the value of the land.

Renovation Limit.

To qualify for the HomeBuilder grant for a renovation the value of the existing property cannot exceed $1,5000,000 before entering into a qualifying renovation contract. A qualifying contract should provide for the value of works between $150,000 to a cap of $750,000.

Who is eligible for the HomeBuilder grant?

The grant is available for first home buyers and existing homeowners.

To qualify for the HomeBuilder grant:

You must spend at least $150,000 (and up to $750,000) on home renovations.
The value of the property you’re renovating must not exceed $1.5 million.
For new builds, the value of the property must not exceed $750,000.
You must be 18 years or older.
Only Australian citizens can apply. (Companies and trusts are not allowed).
The construction must start within three months of the building contract date.

You have to sign a contract and enter the HomeBuilder scheme between 4 June 2020 to 31 December 2020.

Property investors and owner builders are not eligible, the Home Builder Grant is designed to for Owner Occupiers but you may elect, if you already have a property you live in to build a new property and rent out your current home.

How much is the HomeBuilder grant in each state?

The HomeBuilder grant for each state is $25,000.

When should I sign the contract to get HomeBuilder?

The grant will only be available for contracts that are signed between 4 June 2020 to 31 December 2020 and the construction or renovation must start within three months of the contract date.

What are the eligibility qualifications?

- Singles must be earning $125,000 or less based on their 2018/19 tax return or later.
- Couples must have a combined income of no more than $200,000 based on their 2018/2019 tax returns.
- Categories of property that qualify for the Home Buyer Grant.
  - Houses
  - House and land package
  - Off the plan
  - Apartments and units
  - To qualify as a Renovation the works must commence within three months of the contract date.
  - It must improve the accessibility, liveability and safety of the property. Therefore, renovations like a swimming pool, tennis court, shed, etc. will not qualify.
  - The renovation must be completed by a licensed or registered builder, cannot be an owner builder.
  - The builder needs to have a building licence or endorsed contractor licence dated before 4 June 2020?

Smart Tips

- - When builders get busy they put their prices up. Construction will likely cost more if you wait more than a month.
  - If you already have a property that you live in you can buy a new house and land and qualify for the HomeBuilder if you intend to move out of your existing house and rent it out.
  - Get quotes from 2 – 3 builders to avoid overpaying.
  - There has already been an enormous response to the announcement of the Grant and Land Offices and Builders have already seen the stimulus created working so you will need to act to secure your contract.
  - Many building materials are sourced in China and supply has been disrupted due to COVID-19. People planning to build a home should discuss this challenge with their builder and consider locally manufactured materials to avoid delays.
  - As of the date of this post some of the States have not announced how the Grant will work, all lenders have not created policy on how to use the HomeBuilder Grant, Can it be used as a deposit? Will it be considered as funds to complete? Some banks have already specifically ruled that they won’t accept the Grant as funds to complete. Until there is clarity on these points those signing unconditional contracts could be exposed once policies are announced.
  - Have 100 points of ID ready and current so as to avoid delays.
  - Ensure your contract that is signed and dated by you and the registered or licensed builder is dated between 4 June 2020 to 31 December 2020.
  - Check that you have a Copy of your builder’s registration or licence to ensure that it is dated before 4th June, 2020.
  - Ensure that the Contract contains a clause that building works will commence within 3 months of the signing of the contract or you will not qualify to obtain the Grant. We have already seen an instance of a Builder’s solicitor providing additional pages to the Builders standard Contract that absolves the builder of any responsibility if the HomeBuilder grant is not obtainable by the client in the event that the client does not qualify for the grant, this would assume the Builder has no liability if he misses your deadline.
  - Ensure your Copy 2018-19 tax return is available for the supporting documents that will be required to send to your lender and qualifies for the income limits to qualify.
  - Collate all other Builder related documents such as approvals, building contracts and evidence of the value of your land.
  - Homeowners who already have approval from council and have their plans ready should attempt to enter into a qualifying contract to take advantage of the Government largesse.
  - Be aware that builders, particularly those that have seen their forward building bookings filled will simply add your grant to the price of their normal price. Whilst the government has tried to limit this possibility by advising that clients should check last years pricing matches what you are being offered there is the chance that with the law of supply and demand you are destined to pay more for your building works.
  - If you are a first Home Buyer see if you can qualify for the First Home Buyers grant to combine both grants to assist you qualify for your Home Loan to built your new home.

Finally

Home building involves obtaining approvals and checking licenses, both regulated by Government. Apart from the time taken dealing with your builder you also have to hope that your builder or finance approval will not let you down and cause you to miss your deadline. It is not the builder who will miss out on the $25,000 if your building contract is on foot, it is you. It is more important than ever to research the loan policies of the various lenders as they relate to HomeBuilder as different lenders will have different ways that they assess applications and provide approvals. Ensure you have an experienced Mortgage Broker on your side to do the appropriate research for you, collate supporting documents and submit your loan ensuring you can take advantage of the Government Stimulus Grant. Be careful!

www.revive.net