{"id":2491,"date":"2022-05-04T02:57:55","date_gmt":"2022-05-04T02:57:55","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/help-to-buy-vs-first-home-guarantee-how-they-stack-up\/"},"modified":"2022-05-04T02:57:55","modified_gmt":"2022-05-04T02:57:55","slug":"help-to-buy-vs-first-home-guarantee-how-they-stack-up","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/help-to-buy-vs-first-home-guarantee-how-they-stack-up\/","title":{"rendered":"\u2018Help to Buy\u2019 vs \u2018First Home Guarantee\u2019 \u2014 how they stack up"},"content":{"rendered":"

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Would you want to own a house with the Government?<\/strong><\/p>\n

The Federal Opposition has announced that, if elected, it will help more low- to middle-income earners onto the property ladder by buying a stake in their new home.<\/p>\n

Under the \u2018Help to Buy’ scheme, the government would assist people earning less than $90,000 a year ($120,000 for couples) purchase a property by stumping up to 30 per cent of the purchase price for existing properties and up to 40 per cent for new builds.<\/p>\n

The scheme is capped at 10,000 places per year and it\u2019s for first home buyers or anyone who lost a home because of, say, a divorce.<\/p>\n

Obviously, there will be price caps per city and region, with the Sydney and regions\u2019 cap being $950,000.<\/p>\n

\"Au<\/p>\n

As with the Coalition\u2019s Home Guarantee Scheme, eligible homebuyers will avoid the need for lenders’ mortgage insurance.<\/p>\n

Under Help to Buy, eligible homebuyers would pay a 2% rather than a 5% deposit.<\/p>\n

Borrowers would not pay rent on the portion of the property the government owned.<\/p>\n

However, when the property is sold, the government would get back its equity, plus any capital gains on its portion of the home.<\/p>\n

To apply, borrowers need a minimum 2 per cent deposit and must be able to prove they can afford the remainder of the mortgage.<\/p>\n

They wouldn\u2019t be required to pay lenders’ mortgage insurance and don\u2019t need to be a first home buyer but can\u2019t own property at the time of purchase.<\/p>\n

First Home Guarantee scheme (Liberal) vs Rent to Buy scheme (Labor)<\/span><\/h2>\n\n\n\n\n\n\n\n\n\n\n\n
\u00a0<\/b><\/td>\nHome Guarantee scheme<\/b><\/a><\/td>\nRent to Buy scheme<\/b><\/a><\/td>\n<\/tr>\n
Deposit required<\/b><\/td>\n5% for first home buyers, 2% for single parents.<\/td>\n2%.<\/td>\n<\/tr>\n
Places per year<\/b><\/td>\n35,000 for first home buyers<\/p>\n

10,000 for regional buyers<\/p>\n

5,000 for single parents.<\/p>\n<\/td>\n

10,000<\/p>\n

(also providing 10,000 places for the Regional First Home Buyer scheme)<\/p>\n<\/td>\n<\/tr>\n

Who\u2019s it for?<\/b><\/td>\nFirst home buyers, single parents, people moving to regional areas.<\/td>\nAnyone who doesn\u2019t currently own property.<\/td>\n<\/tr>\n
Annual taxable income<\/b><\/td>\nUp to $125,000 for individuals, $200,000 for couples.<\/td>\nUp to $90,000 for singles, $120,000 for couples.<\/td>\n<\/tr>\n
Lenders\u2019 mort. insurance (LMI)<\/b><\/td>\nNo.<\/td>\nNo.<\/td>\n<\/tr>\n
Property price cap in capital cities<\/b><\/td>\nSydney \u2013 $900,000<\/p>\n

Melbourne \u2013 $800,000<\/p>\n

Brisbane \u2013 $700,000<\/p>\n

Perth \u2013 $600,000<\/p>\n

Adelaide \u2013 $600,000<\/p>\n

Hobart \u2013 $600,000<\/p>\n

Canberra \u2013 $750,000<\/p>\n

Darwin \u2013 $600,000<\/p>\n<\/td>\n

Sydney \u2013 $950,000<\/p>\n

Melbourne \u2013 $850,000<\/p>\n

Brisbane\u2013 $650,000<\/p>\n

Perth \u2013 $550,000<\/p>\n

Adelaide \u2013 $550,000<\/p>\n

Hobart \u2013 $550,000<\/p>\n

Canberra \u2013 $600,000<\/p>\n

Darwin \u2013 $550,000<\/p>\n<\/td>\n<\/tr>\n

Pros<\/b><\/td>\n\n
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  • Get into the market sooner without having to pay LMI.<\/li>\n
  • Stop paying rent.<\/li>\n
  • Benefit from 100% of the capital growth.<\/li>\n<\/ul>\n<\/td>\n
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  • Smaller loans, smaller monthly repayments, less interest.<\/li>\n
  • Stop paying rent.<\/li>\n
  • More likely to be approved by the bank.<\/li>\n
  • Get into the market sooner without having to pay LMI.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Cons<\/b><\/td>\n\n
    \n
  • A larger loan means higher repayments and increased impact of rate rises.<\/li>\n
  • Pay more in interest over the life of the loan.<\/li>\n
  • Limited buffer with just 5% equity.<\/li>\n<\/ul>\n<\/td>\n
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