Warrnambool Mortgage Brokers explain HomeBuilder program

Posted on 04/06/2020 by Sinclair Wilson in COVID-19, Mortgage Broking

A Federal Government handout to do up your home, and prop-up the nation’s building industry while we’re at it… sounds like a home owner’s dream come true, right?

On the surface, the Government’s announcement this week that they were launching, HomeBuilder – a new home renovation grant scheme – had our phones in Warrnambool, Mt Gambier, Hamilton, Colac and Camperdown buzzing with excited property owners and home-owners-to-be, thrilled by the idea they could get Government help to finally launch that long-talked-about renovation, or get started on building a new home.

The Government is planning on it working-in with lower-than-ever-before interest rates, to create the nudge a lot of homeowners needed to start a big update to their home, thus injecting money and work into the precarious building sector.

But, even though the scheme is still inky-fresh, we already know there are some parameters that mean HomeBuilder won’t be a free-for-all for every home owner to overhaul their kitchen and bathroom. It will only apply to sizeable building jobs; it will be means-tested; and it will only be for work carried out by already-registered tradespeople.

So here’s what we know so far about HomeBuilder:

Eligible homeowners will receive $25,000

The Government has pledged a $25,000 grant for eligible homeowners, to go towards certain works on the homes they own and occupy.

It’s not for your investment property

This grant is for Owner-occupiers; not investors. You can’t put the money towards an upgrade to your investment property. You need to live in the property, and use it as your main residence.

It’s for contracts signed as of today (4 June 2020) until 31 December 2020

HomeBuilder will apply to a project where the contract is signed between 4 June 2020 and 31 December 2020.

You’ll still qualify for First Home Owner Grant programs

HomeBuilder will complement existing State and Territory First Home Owner Grant programs, stamp duty concessions and other grant schemes, as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.

  • So, in South Australia, you’ll now receive $25,000 PLUS the $15,000 First Home Owner Grant.
  • In regional Victoria, you will receive $25,000 PLUS the $20,000 First Home Owner Grant.
  • And in metropolitan Victoria, such as Geelong, Ballarat and Melbourne, you’ll be eligible for the $25,000 HomeBuilder and $10,000 First Home Owner Grant.

You need to start building within three months of the contract date

Construction of your HomeBuilder-supplemented project must begin within three months of signing the contract – so you can’t drag out your project’s kick-off until this time next year. This is also in place to ensure that the grant doesn’t drive prices up.

You need to commit at least $125,000 of your own money to the project

The idea is that the HomeBuilder grant facilitates big jobs. This isn’t about redecorating the lounge room, or retiling your tired, 70s bathroom. The works need to be substantial – worth at least $150,000, but not more than $750,000.

The work will need to be done by a registered builder

You can’t commit to doing the work yourself – the idea is to keep registered trades in their jobs – so the grant will only apply to work that’s been done by registered builders, rather than owner-builders. All eligible builders have to have been licensed prior to the Government’s announcement this week – and the Government’s indicated there will be other eligibility measures in place to keep cavalier opportunists at-bay.

Don’t get tricky getting your child, sibling, cousin, uncle, aunty or parent to do the build

The Federal Government has said that when you’re negotiating the building contract, the two parties need to deal with each other ‘at arm’s length’. This means the parties need to be independent of each other – no special relationship, such as being a relative. The contract terms have to be commercially reasonable, and the contract price should not be inflated, compared to the fair market price.

The $25k will be means-tested

Couples with a combined annual income of more than $200,000, and individuals who earn more than $125k a year won’t be able to get the HomeBuilder grant. The value of the property the grant will go towards will also determine eligibility; properties have to be worth less than $1.5 million to attract the grant.

It will apply to new home builds – provided they don’t cost more than $750,000

The $25k will be able to go towards building a new home – but if your new digs cost more than $750,000, you’re out of contention.

You can’t use the money to put in a new pool (unless it’s inside your existing house)

Structures separate to the main property, like a pool, or tennis court, or even a new shed, don’t fit the scheme – it has to be part of the main residential property.

There’s no set limit on how big the fund is at this stage – and applications are already open

There’s no cap at the moment on how many of the $25k grants are given out… although we know that at this stage, it will only run until the end of this year. So keep your eye out for the chance to apply, but keep in mind that you’ll have until the end of the year to put your application in, too (in case you need a few months to get your ducks in a row.)

The grant applications will be made via State Governments

Even though the funds are coming from the Federal Government, the grants will be administered and distributed via the State Government. Information on when and how you will be able to access HomeBuilder will become available through the relevant State or Territory revenue office shortly. Hang in there! Alternatively, keep in touch with us – we’ll know when you can hit submit on your application, too.

There’s a good chance you’ll still need finance to get your project started

That’s where we can help. Sinclair Wilson’s Mortgage Broker division can help you identify the right amount and loan to get your dream home build or update happening.

Give us a call today to kick-start your plans.