The First Home Owner Grant and how to make the most of it.
With the $20,000 Queensland First Home Owner Grant (FHOG) finishing up on the 30th of June this year I’ve had a real spike in enquiries on what exactly you can do with the FHOG. Many these enquiries are coming from people that would like to take advantage of this cash boost but have little or no savings of their own.
So, the three main questions are:
Can I use the FHOG as my deposit?
Can I use the FHOG as genuine savings?
Can I just use the FHOG and no savings to buy something?
The short answer to these questions is yes but there are caveats around this so let me expand a bit below.
1. Can I use the FHOG as my deposit?
Most banks require a 5% genuine savings. How can we show 5% genuine savings? The first way is to save the 5%! As this is not always possible, the second way is to have been renting through a licenced real estate and show 3-6 months’ rental ledger history showing good conduct. If you can satisfy either of these than you can certainly use the $20,000 toward your deposit.
2. Can I use the FHOG as genuine savings?
Using the above scenario, if you are renting through a licenced real estate agency then yes, this can be used toward your genuine savings. This could mean that if you have found a property for $400,000 that is brand new or to be built, this $20,000 would be enough for your 5% genuine savings. You would still need another few thousand dollars to go toward your legal costs and transfer duties, but you would be very close to not needing any of your own savings. This is not something all the banks will look at, but it is available.
3. Can I just use the FHOG and no savings to buy something?
Although I did kind of answer this above, you may be thinking but what if the house I am looking at is more than $400,000 or if I don’t fit the criteria of the banks that will still lend at 95% + LMI? Just last week I had a client in this exact situation. They had been renting through a licenced real estate agent so could satisfy the genuine savings criteria but the house they were looking to buy was $420,000. I could point them in the right direction where we could secure a similar house in a similar location where the builder could subsidise their deposit. This meant they were able to purchase their first home with a larger deposit, opening up the banks that they could apply through and reducing their interest rate!