Home Builder Grant Extended until 2021

Fantastic news for all current and future owner-occupiers … on the 29 November 2020, the Australian Government announced an extension to the Home Builder program until 31 March 2021.

What is the Home Builder Grant?

The Home Builder Grant is a program introduced by the Australian government to assist in the support of the residential construction and employment sector. According to the Australian Treasury:

“HomeBuilder provides eligible owner-occupiers (including first home buyers) with a grant to build a new home or substantially renovate an existing home.”

Who is eligible for the Home Builder Grant?

There is a common misconception that the Home Builder Grant is only eligible to first home buyers. Whilst there are several grants available for applicants purchasing their first property, the Home Builder Grant is available to all eligible persons who:  

• Are 18 years of age.
• Australian citizens.
• With an annual gross (taxable) income below $125,000 individual or a combined $200,000 for couples.

There are also certain requirements in regard to the property, for example:

• The home must be your principal place of residence after completion or settlement (not valid for investment properties).
• For contracts signed between 4 June 2020 and 31 December 2020:
  • off-the plan or new homes must be valued at $750,000 or less (including GST);
  • the build amount and the value of the land on a new build (including any existing structures) must be $750,000 or less (including GST);
  • substantial renovations on an existing home must cost between $150,000 and $750,000 (including GST); and the home must be valued at less than $1.5 million before renovation.
• For contracts signed in the extension period, from 1 January 2021 to 31 March 2021, the above criteria applies, with some additional changes to property price caps, building licensing requirements and the total grant value.  

What if I live in NSW or Victoria? Property can be more expensive here.

The Australian government have acknowledged that the $750,000 property price cap for building in some states is unrealistic. Therefore, for new building contracts signed between 1 January 2021 and 31 March 2021, property price caps are also being increased to account for the difference in State markets. For example, in New South Wales the cost of the land and build after completion will be increased to $950,000 and in Victoria to $850,000.

How can the grant help me secure a home loan? Can I use it to assist with my deposit?

Many prospective home buyers and builders have been left confused by how the Home Builder Grant can assist them in securing the finance needed to get into their own home because the grant is paid directly into your nominated bank account, only when there is evidence that the building foundations have been laid and first progress payment has been made. This has meant that many lenders have remained reluctant to consider the impending payment of the grant as part of borrower’s proof of funds to complete the sale.

What about those who need the grant to secure finance? Luckily, Alpha Lend has exclusive access to lenders who are willing to recognise the grant as part of your deposit.

This does not change how the grant is paid, only how the lender assesses the application for finance. 

To find out more about the key eligibility criteria, requirements to use the grant as part of your deposit or to discuss applying for a home loan today, contact your specialist brokers at Alpha Lend.
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For more information: Keep reading at the Australian Treasury website here.