Unlocking Home Ownership: A Closer Look at the Family Home Guarantee
Owning a home is a dream for many, but for single parents, it can sometimes feel out of reach. The Australian government’s Family Home Guarantee aims to change that narrative, offering a beacon of hope for eligible single parents striving for home ownership. This initiative is a testament to the government’s commitment to making housing in Australia more accessible.
Understanding the Family Home Guarantee
The Family Home Guarantee is a groundbreaking initiative designed to assist single parents in overcoming the often-daunting barrier of hefty deposits. Instead of the traditional 20% deposit, this scheme allows eligible single parents to enter the housing market with as little as a 2% deposit. The government then acts as a guarantor for the remaining amount, ensuring that more families have a place to call home.
Property Market Implications
Market Accessibility: Discussing how the Family Home Guarantee impacts the ability of single parents to enter the property market and the potential increase in homeownership rates.
Market Trends: Analyzing how this initiative might influence the demand for certain types of properties, such as family homes and apartments.
Local Housing Markets: Considering the effects of the Family Home Guarantee on specific regional housing markets.
Financial Considerations and Future Prospects
Long-Term Financial Benefits: Outlining the potential long-term financial advantages of homeownership through the Family Home Guarantee, including wealth accumulation and equity building.
Financial Responsibility: Advising on the financial responsibilities associated with homeownership, such as mortgage repayments, property maintenance, and budgeting.
Future Possibilities: Speculating on the expansion of the Family Home Guarantee program and its potential influence on government housing policies.
Who is Eligible?
Eligibility is centered around supporting single parents, irrespective of whether they are first-time homebuyers or re-entering the housing market. Key criteria include:
Being a single parent (with at least one dependent child).
Meeting specific income caps.
Purchasing a property that falls within the price threshold specific to the region.
For instance, Jane, a single mother of two in Melbourne, was able to purchase her first home through the Family Home Guarantee, despite having only a modest deposit saved up.
Navigating the Application Process
The application process is straightforward. Begin by checking your eligibility, then approach one of the participating lenders. These lenders will guide you through the application, ensuring you understand every step. Over time, the list of participating lenders has grown, reflecting the program’s success and the financial sector’s trust in it.
Benefits and Considerations
The immediate benefit of the Family Home Guarantee is clear: reduced deposit requirements. This translates to:
Faster access to the property market.
Potential savings on rent.
Building equity in a property sooner.
However, it’s essential to consider the broader financial landscape, including current interest rates and the long-term implications of starting with a smaller deposit.
Success Stories and Program Impact
Since its inception, the Family Home Guarantee has transformed lives. Single parents, once uncertain about their housing future, now find themselves homeowners, building a secure foundation for their families. The ripple effect on the economy is undeniable, with increased property sales and a boost in consumer confidence.
Expert Insights and Tips
Financial advisors and mortgage brokers emphasize the importance of understanding the nuances of the Family Home Guarantee. While it’s a fantastic opportunity, it’s crucial to assess your financial situation and long-term goals. Remember, while the program aids in purchasing, maintaining a home requires a stable income and financial planning.
The Family Home Guarantee is more than just a policy; it’s a commitment to the single parents of Australia. It recognizes the challenges they face and offers a tangible solution. If you’re a single parent dreaming of owning a home, this might be the key to unlocking that dream.
Frequently Asked Questions
What is the Family Home Guarantee?
The Family Home Guarantee is a government initiative designed to assist single parents in entering or re-entering the housing market with a minimal deposit.
Who is eligible for the Family Home Guarantee?
Single parents, regardless of whether they are first-time homebuyers or previous homeowners, can benefit from the Family Home Guarantee, provided they meet specific income and other eligibility criteria.
How does the Family Home Guarantee work?
The program allows eligible single parents to purchase a home with as little as a 2% deposit, with the federal government guaranteeing up to 18% of the loan, reducing the need for Lenders Mortgage Insurance (LMI).
How does the Family Home Guarantee differ from the First Home Loan Deposit Scheme?
While both schemes aim to help Australians achieve homeownership with a reduced deposit, the Family Home Guarantee specifically targets single parents, regardless of their first-time homebuyer status.
How many places are available under the Family Home Guarantee?
The government has allocated a limited number of spots for the Family Home Guarantee, making it essential for interested individuals to apply as soon as they’re ready.
Can I access other government grants or schemes along with the Family Home Guarantee?
Yes, eligible individuals can often combine the Family Home Guarantee with other state and federal homeownership incentives, but it’s essential to check specific eligibility criteria for each.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
How to Refinance When Property Prices Are Declining
Eligible single parents with dependants looking to build a new home or purchase an existing home are able to apply for a loan to purchase an eligible property through a participating lender.
The Family Home Guarantee program is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government.
NHFIC guarantees to a participating lender up to 18 per cent of the value of the property, provided the borrower has a minimum 2 per cent deposit, and is eligible for the program.
This will enable single parents with dependants to enter, or re-enter, the housing market sooner.
What Types of Properties are Eligible?
For a property to be eligible under the Family Home Guarantee, it must be a residential property – this term has a particular meaning under the program and is consistent with the First Home Loan Deposit Scheme.
Eligible residential properties generally include:
an existing house, townhouse or apartment
a house and land package
land and separate contract to build a home
an off-the-plan apartment or townhouse
Who is Eligible for the Family Home Guarantee?
Australian citizens who are at least 18 years of age. Permanent residents are not eligible.
Must be a single parent with at least one dependant.
The single parent must have a taxable income that does not exceed $125,000 per annum for the previous financial year. NB: Child support payments are not included as income for the purpose of the income cap.
The single parent must be the only name listed on the loan and the certificate of title.
It is expected that the single parent demonstrate that they are the natural or adoptive parent of a dependent child within the meaning of s.5 of the Social Security Act 1991 (Cth). In a general sense, this means that the person must show that they are legally responsible (whether alone or jointly with another person) for the day-to-day care, welfare and development of the dependent child and the dependent child is in their care. Depending on the terms of any shared custody arrangement, this may enable both individuals in a former couple to separately access the Family Home Guarantee.
Individuals must have at least 2 per cent of the value of the property available as a deposit. If the borrower has a deposit of more than 20 per cent, then the home loan cannot be covered by the Family Home Guarantee.
Loans under the Family Home Guarantee require scheduled repayments of the principal and interest of the loan for the full period of the agreement. The loan agreement must have a term of no more than 30 years.
Applicants must intend to be owner-occupiers of the purchased property. In the case of active Australian Defence Force member applicant(s), the guarantee is not subject to the owner- occupier requirement after entering into the loan if they cannot meet this requirement because of their duties.
Applicants can be either first home buyers or previous owner-occupiers who do not currently own a home. That is, the applicant must not currently have a freehold interest in real property in Australia, a lease of land in Australia or a company title interest in land in Australia.
The eligibility criteria must be satisfied at the time the loan agreement is entered into. More information on eligibility criteria for the Family Home Guarantee will be outlined in forthcoming amendments to the National Housing Finance and Investment Corporation Investment Mandate Direction 2018.
What Property Price Thresholds Apply for the Family Home Guarantee?
The property price thresholds for the Family Home Guarantee will be the same as those applying to the First Home Loan Deposit Scheme.
The capital city price thresholds apply to regional centres with a population over 250,000 (Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast), recognising that dwellings in regional centres can be more expensive than other regional areas.
For the territories of Jervis Bay Territory, Norfolk Island, Christmas Island and the Cocos (Keeling) Islands, the relevant price cap is the same as the rest of state cap that applies in the closest State – New South Wales (for Jervis Bay Territory and Norfolk Island) and Western Australia (for Christmas Island and the Cocos (Keeling) Islands).
How to Apply?
Eligible single parents will be able to apply for the Family Home Guarantee through a FHLDS participating lender.
There are no costs or repayments associated with the guarantee. However, eligible single parents are responsible for meeting all costs and repayments for the home loan associated with the guarantee.
NHFIC will not accept applications directly and does not maintain a waiting list for places, including for the additional guarantees to be made available.
Date of issue: May 2021
Source: Australian Government
Given the strength of the mortgage broker channel in Australia, it is clear that most people already understand the benefits of trusting a finance expert when it comes to buying property. Indeed, brokers are responsible for writing over half of all new mortgages. But a report shows that even the banks themselves admin that brokers are the “most influential sources” of information on mortgage products for consumers.
The 2017 Deloitte Australian Mortgage Report quizzed a panel of experts representing the leading banks, lenders and mortgage industry heads about the state of the mortgage market, and 60% agreed that brokers are the number 1 go-to for those seeking housing finance, whether for a family home or investment property.
“What is the most influential source for consumers around the mortgage process? This is not how they do it, or how they choose to engage, but to whom they turn initially to understand the processes. The consensus was 60% brokers,” James Hickey, Deloitte mortgage specialist, said in the report.
The strength of the broker channel, he added, is reflected in the top two features valued by consumers when choosing a mortgage. For when price is removed from the equation, he says that what matters most to consumers is “product and customer experience” – two features that are at the heart of the broker experience.
For while the big banks have a broad, generic approach, brokers understand the nuances of their local market and can offer a wide range of mortgages from different lenders to meet their clients’ specific needs.
“The fact that products are changing all the time, brokers are the ones with a finger on the pulse across the whole marketplace of current offers,” Hickey said.
Buying a new home can be a cash-consuming exercise, before you even get down to the business of making an offer or bidding at auction. By the time you get to auction day, you really need to have all your due diligence ducks in a row. A few hundred dollars spent on building and pest reports before an auction can potentially save you tens of thousands of dollars in costly repairs down the line.
Since the average house-hunter checks out five different buildings before making a purchase, this exploratory work can be time consuming too.
Before you check out a home’s structural soundness, be sure to check out the inspection company’s credentials too. Cheap and fast is great if you’re spending a couple of bucks on a burger, but when you’re talking about millions of dollars and family homes, it’s worth paying for quality work and reports you can rely on.
It pays to thoroughly research your chosen building inspector. For your added peace of mind and security, make sure the company you choose is properly insured. Many businesses don’t have the correct cover, which can leave you high and dry should any problems be subsequently discovered with your property.
It’s also not a great idea to just go with an existing report on a property. Since last year, real estate agents have had to inform buyers if a building and pest inspection report has already been carried out. While it’s tempting to pay the reduced fee to access an existing report, care must be taken. There have been tales of unscrupulous inspectors working with agents to produce reports that are beneficial to vendors by ignoring potential problems.
Finding your dream home that ticks all the boxes is the difficult part of the house-hunting process. Ensuring that there are no hidden nasties lurking beneath the floorboards, up in the rafters or under a fresh lick of paint doesn’t have to be as difficult. By doing due diligence on your property, you can be confident of its true value.
If you do find issues but you’re still smitten with the home of your dreams, a details report will at least put you in a stronger negotiating position.
Pest & Property Report Tips
Get Googling and thoroughly check out your inspection company’s credentials. Check out Google reviews and ask for references. Seek recommendations from friends and family.
Make sure your inspector is properly insured.
Ensure your inspector gets under the floorboards and into the roof space; it’s difficult, dirty work but these are areas where the greatest problems can occur.
Turn any negatives that may turn up in your report into positives by using them to drive down the vendor’s price expectations.
Comparison Rate calculated on a secured loan amount of $150,000 for a term of 25 years. WARNING: This Comparison Rate is true only for the example given and may not include all fees and charges. Different terms, fees and other loan amounts might result in a different Comparison Rate. Fees and Charges Apply. Terms and Conditions are available on request.