The Australian Federal Budget was recently released for 2022 to 2023 to help Australians cope with the rising cost of living as the pandemic, conflict in Ukraine and global warming put pressure on the cost of goods and logistics.
The federal budget updated the Home Guarantee Scheme and launched the First Home Super Saver Scheme to allow Australians to own homes sooner.
As Australia faces labor shortages and rising prices for building materials in the construction industry, house prices have soared, costing the community dearly. most people looking to become first-time buyers.
In some locations, such as Sydney, it may take longer eight years to save for a house deposit. If you don’t have a 20% down payment, you would be forced to pay the lenders mortgage insurance on top of your loan.
So in this year’s federal budget, the government seeks to address both of these issues, albeit temporarily.
One is to help homeowners save for a deposit and the other is to secure your home loan.
To help Australians increase their savings for a home deposit, they have launched the First Home Super Saver Scheme (FHSSS).
This allows Australian tax residents to set aside a portion of their pre-tax income in a deposit to their superannuation account.
These funds will normally have a much higher interest rate compared to a traditional savings account and can only be withdrawn for home deposit.
This helps the future owner, with 2 major advantages, the first is a higher interest rate for savings and the second is to reduce their taxable income.
Effective July 1, 2022, the maximum amount that can be released under the FHSSS will increase from $30,000 to $50,000.
The second very important feature of the federal budget is to secure your home loan through the Home Guarantee Scheme.
So what does it do? Under this program, eligible first-time home buyers will be able to build or buy a first home sooner, as this program provides a guarantee to participating lenders for up to 15% of the purchase price of the property.
This means you can enter the real estate market with just a 5% down payment without having to pay for mortgage insurance from lenders.
The federal budget also aims to increase the number of places to 50,000 per year.