New Single Parent Family Home Guarantee – Buying Property Assistance for Single Parents
From 1 July 2021, single parents will receive assistance to purchase a property as a strategy to get more people into their own homes. Announced in Tuesday’s 2021-2022 Federal Budget, the government is set to provide a guarantee of 18 percent of the purchase price for single parents with dependent children. This means that single parents only need a 2 percent deposit to purchase an existing home, or to build a new home.
The scheme largely targets single mothers, with the government estimating that 80% of single parents who are eligible are women. There are only 10,000 places available for the scheme and is to be spread out over four years with 2,500 places per year. The scheme won’t put a limit on helping first home buyers, but also help single parents attempting to re-enter the market. To be eligible, the single parent can only have an annual taxable income of no more than $125,000, cannot currently own property, and must be an Australian citizen over the age of 18. The single parent must also be the only person listed on the title and the loan and must live in the home. In Sydney and NSW regional centres, the scheme is capped at homes worth $700,000 whilst the rest of the state is capped at $450,000.
The biggest benefit of the scheme is the avoidance of lenders’ mortgage insurance costs (LMI), which can amount to thousands of dollars. However, whilst the government guarantee covers 18 percent of the loan amount, that 18 percent will not be paid for by the government, but instead will add up to the loan that the single parent needs to repay.
If you are an eligible single parent and have any questions about this new scheme, contact us today. We would be happy to assist you.
Jeanette Khodeir and Isobel Bathgate
14 May 2021