Owning a home is a significant financial decision. While the journey to homeownership can be challenging because of the costs involved, there is some good news for first-time homeowners in Australia in the form of a First Home Owner Grant(FHOG).
FHOG is a state-funded scheme that aims to offer a helping hand to aspiring first-time homeowners. Keep reading as we explore everything FHOG, from what it is, the eligibility criteria, and everything in between.
Understanding First Home Owner Grant
First Home Owner Grant was introduced on 1 July 2000 to help first home buyers build or buy a new residential property as their primary residence.
Recipients of the FHOG are not expected to pay it back, and it is offered as a perk to encourage or assist more people in buying a home or land on which to build their first home.
Since state governments are responsible for managing and extending the funds to prospective homeowners, the grants can vary from state to state. However, funds offered under FHOG must be used exclusively for home buying or buying a piece of land to build a house.
If you intend to build or buy your first house, you may want to work with a reputable building company with experience in FHOG and building family homes for a first home buyer like you.
Eligibility for A First Home Owner Grant
Qualification for FHOG can vary depending on your state of residence. However, there are some similarities in the eligibility requirements across all states. To be eligible for FHOG, the applicant must:
- Be above 18
- A citizen or a permanent Australian resident
- Plan to use the home as the primary residence for at least six months
- Have not owned a home in Australia
Additionally, if you intend to buy a home as a partnership where one member of the partnership has been a beneficiary of FHOG, you may not be eligible. On top of that, the condition of the home in question can play a part in eligibility, depending on your state.
Some states allow first-time homeowners to access FHOG if they build or buy a home that has not been lived. Under some states, the home may be considered new if it has undergone massive renovations to make it as good as new.
FHOG Application Process
The FHOG application process is pretty straightforward. You can apply for FHOG in two ways; through your mortgage provider or directly to your state’s body responsible for managing and issuing FHOG, usually the Revenue Office.
If you encounter challenges when making an application, you may seek assistance from your mortgage provider.
When Is The FHOG Paid?
Like eligibility, the time required to receive the funds can vary depending on the state, but some similarities exist. For example, most states provide the payment on settlement if you intend to buy an already built home.
If you engage a contractor in building your home, the FHOG is paid to the contractor at the first progress payment. The grant can only be accessed after the home is complete and you receive a certificate of occupancy for an owner-built house.
Besides buying a house or land, the grant can also purchase a house plan and is paid on settlement.
Concessions and FHOG
Concessions may sometimes apply for first-time homeowners, depending on your state. In some states, first-time homeowners get massive cuts on stamp duty, but others don’t.
Duty stamps are costly and can increase the cost of a home by a considerable margin.
It is important to understand that stamp duty is a form of government tax that can differ from one state to another. The stamp duty is often paid upfront upon the purchase of land or home and is usually calculated as a percentage of the total value of the investment.
You may want to talk to your local government office or a real estate expert about the applicability of concessions in your area.
If you aspire to own a home for the first time, taking advantage of the FHOG may be a good idea. While the grant may not be much compared to the cost of a home, it can help in one way or the other.