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In the 2022 federal budget, the federal government announced a new Regional Home Guarantee (RHG) scheme to boost construction and help homebuyers get onto the property ladder sooner in regional/rural areas. 

Let’s take a closer look at the Regional Home Guarantee – 5% Deposit Scheme and see what it might mean for you.

Need help navigating government grants and choosing the right property? Book a discovery call with Capital Properties today. As investment specialists, it’s our mission to help Defence personnel and others attain future financial security.

On the go? Here’s 30 seconds of take outs:

  • The Regional Home Guarantee (RHG) is an extension of The First Home Guarantee, that gives buyers the ability to purchase a home with a 5% deposit without the need for lenders mortgage insurance (LMI).
  • The RHG applies only to new properties in regional areas.
  • The RHG comes into effect in October 2022 and will continue until 30th June 2025.
  • You must be an Australian citizen or permanent resident aged at least 18 years.
  • Buyers cannot have owned a property for the 5 previous years. 
  • There are income restrictions, see below for full eligibility criteria.

Keep reading >>

What is the Regional Home Guarantee?

The Regional Home Guarantee (RHG) is an extension of the First Home Guarantee, previously known as the “First Home Loan Deposit Scheme (FHLDS)” which came into effect on 1st January 2020. That scheme allowed eligible buyers to purchase a property with a smaller deposit of only 5% without the need to take out Lenders’ Mortgage Insurance (LMI). 

This new RHG will allow eligible buyers in regional areas to purchase or build a new property with a similarly low deposit without paying the LMI because the government acts as a guarantor on part of the loan, guaranteeing up to 15% of the purchase price. That means the bank/lenders no longer need to take out this insurance and the savings are passed onto the buyer.

The RHG is only available to first-home buyers or people who haven’t owned a home for at least 5 years. The full eligibility criteria are explained below.

How does the Regional Home Guarantee work?

The Regional Home Guarantee now allows potential buyers to purchase a property with a lower than usual deposit, allowing them to get onto the property market sooner. Usually, borrowers with less than a 20% deposit, i.e., borrowing more than 80% of a property’s value, would be required to pay LMI to protect the lender. 

The government predicts that regional buyers will be able to save up to $32,000 in LMI, a significant saving for all first home buyers.

The Federal Government has allocated 10,000 guarantees a year starting from October 2022 until 30 June 2025. This is in addition to the 35,000 guarantees a year promised under the First Home Guarantee/’FHLDS’. 

Who’s eligible for the Regional Home Guarantee – 5% Deposit Scheme?

To be eligible for the Regional Home Guarantee – 5% Deposit Scheme you must meet these criteria:  

  • You must purchase a new home in a regional location and have saved a 5% deposit.
  • Be a first-time buyer or have not owned a property for at least 5 years. This includes an investment property, commercial property, land/or a company title interest in land in Australia. 
  • You must be at least 18 years of age and an Australian citizen or permanent resident.
  • You cannot have an income of greater than $125,000 as a single person, or more than $200,000 for de-facto/married couples in the previous financial year. This income cap is reassessed every year by the National Housing Finance & Investment Corporation (NHFIC).
  • Outside of marriage/de-facto couples, joint applicants are not eligible (e.g., parent/child, siblings, friends, etc.).
  • You must live in the property within six months of purchase and continue to live there while the home loan is guaranteed under the 5% Deposit Scheme. 

What properties are eligible for the Regional Home Guarantee – 5% Deposit Scheme?

The Regional Home Guarantee is applicable to new homes only. This means that the property must have completed construction on or after 1 January 2020 and cannot have been lived in by anyone previously and/or sold, rented, or leased. 

The exception to this is if the property’s been significantly renovated in place of a demolished property and put on the market in an as-new condition. It doesn’t allow you to buy an old house and do your own renovations.  

Eligible properties include freestanding houses, townhouses or apartments such as:

  • Newly built properties
  • Off-the-plan properties 
  • House and land packages
  • Land and a separate contract to build a new home

Property Price Caps for the Regional Home Guarantee

As per the First Home Guarantee, with the Regional Home Guarantee you can only purchase properties within certain price caps:

State or Territory

Build or purchase newly built home

Capital city & regional centres Rest of state
NSW $950,000 $600,000
VIC $850,000 $550,000
QLD $650,000 $500,000
WA $550,000 $400,000
SA $550,000 $400,000
TAS $550,000 $400,000
ACT $600,000 N/A
NT $550,000 N/A

Source: National Housing Finance & Investment Corporation (NHFIC).

How To Apply the Regional Home Guarantee – 5% Deposit Scheme

Applying for the Regional Home Guarantee – 5% Deposit Scheme is a similar process to the First Home Guarantee. We’ve covered the 5% Deposit Scheme before. Applications must be made directly with one of the 27 participating lenders of the Scheme or via a mortgage broker. 

Capital Properties can put you in touch with a Mortgage Broker to help you with this process. And we know what makes a great Mortgage Broker.

If that’s the good news. What’s the bad news?

While the Regional Home Guarantee – 5% Deposit Scheme is great news for many first home buyers who would otherwise struggle to get on the property ladder, some homebuyers and builders are concerned that the move could mean higher property prices in regional markets.

However, the probability is that it will increase demand for more affordable properties, bringing new life to some less populated areas.

There is also some concern that due to further probable interest rate rises in 2022, even these smaller loans will be more difficult to service. Capital Properties strongly advises that you seek expert advice to help you make the best investment decision for your situation.

If you’re still wondering what the Regional Home Guarantee means for you, then get in touch. As experienced property investors, we can help you navigate the Regional Home Guarantee – 5% Deposit Scheme and any other schemes that can help you invest and work towards your future financial security. 

Book a free Discovery Session today and let’s get started. 

 

In this blog post, we’ll discuss the nitty-gritty of buying a house in Australia while in the Australian Defence Force (ADF). We’ll include the information you need to take advantage of some loan subsidies and other incentives that are available to you as an ADF member.

Want help choosing the right property? Book a discovery call with Capital Properties today. As investment specialists, it’s our mission to help defence personnel and others attain future financial security.

On the go? Here’s 30 seconds of take outs:

Capital Properties property investment advice experts can help you with these ADF property-buying incentives:

  • Home Purchase Assistance Scheme (HPAS) offers eligible ADF members a lump-sum payment of $16,949 before tax.
  • Home Purchase or Sale Expenses Allowance (HPSEA) compensates for costs accrued when selling/buying in a new area.
  • Defence Home Ownership Assistance Scheme (DHOAS) improves recruitment/retention by helping ADF members and their families own their own houses.

ADF property investment schemes

Purchasing a property is recognised as one of the best ways to take control of your financial future. A well-designed house in the right location will consistently deliver capital growth.

The Australian Defence Force has provided various incentives to make it easier for its members to own a house. There are multiple loans, grants, and subsidies to enable ADF members to become homeowners.

These ADF property investment incentives come in two categories:

  • Assistance to purchase (HPAS/HPSEA); and
  • Assistance to repay the loan (DHOAS).

Let’s take a closer look.

1. Home Purchase Assistance Scheme (HPAS)

The Home Purchase Assistance Scheme (HPAS) is an ADF property investment assistance scheme designed to help you purchase your home. It comes as a lump-sum payment of $16,949 before tax – not bad!

If you’re considering buying a house while in the defence force, the amount you’re eligible to receive depends on your ownership share. For example, if you’re buying a property with your partner, the amount will be halved.

Criteria for eligibility to receive an HPAS payment include:

  • You cannot have received the HPAS payment before. You only get this payment once in your entire period of service.
  • The home you want to buy must be in your current (or new) posting location.
  • When you sign the purchase contract, you must plan to serve in the post for 12 months after purchase. This means you have to live in the house for the remainder of your tenure at that location.
  • If you are categorised as a member with dependants (unaccompanied) [MWD(U)], then you need to remain in that category for the next 12 months.

Find out more about how Capital Properties can help you secure your HPAS.

2. Home Purchase or Sale Expenses Allowance (HPSEA)

The ADF created the Home Purchase or Sale Expenses Allowance (HPSEA) to compensate ADF members for reasonable costs accrued if they’ve had to sell their house due to being posted to a new location. The allowance also covers any expenses that an ADF member might accumulate if they sell in one posting location and buy again in a new one.

For example, imagine you own a house in Victoria but get posted to Sydney, and you decide to buy a home there. You would be eligible to receive HPSEA to cover the sale of your home in Victoria and the purchase costs of your new home in Sydney.

HPSEA also reimburses you for other reasonable costs such as real estate agent commissions, stamp duty, solicitors fees, mortgage costs, etc.

Find out more about how Capital Properties can help you secure your HPSEA and other property investment advice.

3. Defence Home Ownership Assistance Scheme (DHOAS)

The Defence Home Ownership Assistance Scheme (DHOAS) aims to achieve two goals:

  • Helps Australian Defence Force members and their families own their own houses and;
  • Improves recruitment and retention within the Australian Defence Force.

A DHOAS loan subsidises your home loan and does so for a period of time, correlating to how long you serve.

As of last year (2021), it contributes a monthly amount of between $185 and $370 to your home loan. The amount you receive under DHOAS varies and is based on a three-tier system. This table shows the current subsidy tiers and their details as per the DHOAS government website.

Subsidy tier Minimum Permanent service Minimum Reserve service Subsidised loan amount Maximum monthly subsidy*
1 4 years 8 years $310,937 Up to $185
2 8 years 12 years $466,406 Up to $277
3 12 years 16 years $621,874 Up to $370

 

*Estimated monthly subsidy values based on the April 2022 median interest rate. These monthly subsidy values fluctuate based on changes in the median interest rate.

To be eligible for DHOAS, you must have been a member of the ADF for at least four years. You also must have served within the last five years, undertaken a qualifying period, and accrued a service credit. There are also occupancy requirements, such as having occupied the premises for at least 12 months. Full eligibility criteria are on the DHOAS government website.

There are three banks approved to provide DHOAS loans for people buying a house with the ADF scheme. These are the Australian Military Bank, the Defence Bank, and the National Australian Bank (NAB).

Find out more about how Capital Properties can help you with the DHOAS.  

Property investment advice

If you’re considering buying a house while in the defence force, Capital Properties can help you navigate home loans.

The decision to purchase or invest in a house is one of the best decisions in any person’s life. And thanks to the ADF property investment scheme, buying a house while in the defence force is easier with access to grants and incentives to help you buy your dream home.

Are you an Australian Army, Royal Australian Air Force or Australian Navy member? Are you looking to gain financial independence by buying property in Australia? Do you want to leverage government loans and grants? Then look no further; we are here for you. We’ll help you walk you through the entire process of buying a house with the ADF scheme and settling in your dream home in Australia.

Ready to get started? Contact us now!

It’s no secret that buying a property is one of the best investment decisions that you can make. Property investment is far more predictable than shares or crypto, for example, which can be massively volatile in unstable economic times. Investing in property allows you to benefit from tax advantages while gaining predictable cash flow and great returns.

The current demand for rental properties is increasing faster than ever, and with a rise in house prices, it’s also more lucrative than ever.  So, if you’re after a tried-and-tested way to invest your money, buying a property should be at the top of your list.

This article will walk you through our top 10 tips to help you buy your first investment property and ensure you get the most out of your investment for future financial security.

Want some help choosing the right property? Book a discovery call with Capital Properties today. As investment specialists, it’s our mission to help Defence personnel and others attain future financial security.

On the go? Here’s 30 seconds of take outs:

Here’s Capital Properties 10 top tips to help you buy your first investment property:

  • Choosing the right location is key.
  • Check the condition of the property & don’t over-capitalise on improvements.
  • Make sure you have time to invest in your property investment or hire an expert to help.
  • Stay updated on regulations & property maintenance.
  • Research thoroughly before buying your investment property.
  • Work out your budget, including projected expenses & profit.
  • Refrain from making emotionally charged decisions or let our expert Buyer’s Agent Service team negotiate for you.
  • Choose investment partners wisely & clearly assign duties & tasks.
  • Be finance ready – seeking pre-approval for a home loan is free, easy & will save you money.

Keep reading >>

What is an investment property?

Let’s start by taking a closer look at what an investment property is. Simply put, an investment property is a residential or commercial property that’s purchased as a financial investment – i.e., it’s an asset that you can make money from through renting or adding value and re-selling. Therefore, it’s not usually your home/primary residence.

Some properties will have more income or investment potential than others, so it’s vital to know what to look for when you go to buy your first investment property.

What you need to know before you buy your first investment property

When you decide to invest in real estate or if it’s time to add to your current portfolio, here are some of our top tips to buying an investment property.

  1. Location. Location. Location.

We’ve all heard that location is important, but are you sure you know what to look for in a location for an investment property? Residential tenants require properties that are close to amenities. For most tenants, that includes easy access to public transport or main arterial roads. Families require local schools, shops, medical clinics etc. Singles/young couples want shops, restaurants, bars and safe public spaces. Commercial properties need high foot traffic and/or extensive parking. Remember, a more desirable location will have increased demand and can command a higher rent.

One thing to note is that some up-and-coming areas may have a higher potential to increase in value over time than already popular areas. Although this is true in many cases, bear in mind there’s more risk involved when investing in an unproven location.

  1. Condition of the property

Another important consideration when buying an investment property is the condition of the property at the time of purchase. Although taking on a fixer-upper ensures there’s potential to gain more capital, you need to be certain that the cost and effort pays off when it comes to selling.

Carrying out an extensive renovation and over-capitalising is likely to result in less profit. Especially when you consider the time it takes to complete the project, the costs of improvements, including paying skilled trades, building materials, bank fees etc., as well as the ability to recover your investment due to delayed rent collections.

  1. Time

As a first-time buyer, negotiating the purchase your first investment property can be time-consuming and stressful. And as your investment portfolio grows, it will place even more demands on your time.

If you have a full-time job, you’re already likely to be juggling many responsibilities. And it’s even more of a burden if you’re deployed away from home or overseas. That’s why the Capital Properties team strongly advises that you consider hiring a property manager to help with the workload and carry the stress! We’ve talked about building a property investment ‘A-team’ before here. You won’t regret it.

  1. Regulations

Becoming a landlord is not easy. It’s your responsibility to be aware of current codes and regulations concerning rental properties and the rights of your tenants. For example, there are extensive regulations surrounding repairs and maintenance of the property, including swimming pools, smoke alarms, gas safety and other facilities that may be part of the property.

These laws change often and vary in each state and territory. Falling behind may make you unwittingly liable if you don’t stay informed.

  1. Do your research

It goes without saying yet deserves repeating: it’s 100% vital to do thorough research before you buy your first investment property. From location to loan type, regulations, area demand and more, you need to be across every aspect of the property you’re considering investing in.

Capital Properties book The Property Investment Book for Switched On People shares expert investment advice and is a must read for first-time investors and anyone looking to expand their property portfolio.

  1. Manage your budget

Before you buy your first investment property, it’s fundamental to work out your projected expenses and profit. Capital Properties investment toolkit will help you make sense of the numbers. Our free online calculators, spreadsheets, checklists, and apps will help you make well-informed property investment decisions.

The Capital Properties Budget Planner tool makes budgeting a streamlined process and will ensure you don’t forget anything and end up with potentially costly ‘hidden’ expense. And our Property Investor Planner helps you to generate an accurate annual budget for all of your investments.

  1. Be aware of making emotional decisions

Buying a property is always going to be an emotional process. Excitement, worry, pride, joy… it can be a lot! But when it comes to buying your first investment property, it’s important to remain logical.

Think of it as strictly business and try to negotiate as logically as possible to get the best results. If you find it difficult to remain emotionally detached, our expert Buyer’s Agent Service team can help you.

  1. Choose your partners well

Investing in a property with a partner can be a fantastic way to spread the financial burden and risk, but it can also go horribly wrong. So, it’s essential to calculate the pros and cons of the partnership before you leap in.

Do you trust this person? How well do you know them? Are you fully aware of their financial status? How will you divvy up the operational responsibilities and financial aspects of the investment expenses and profits? Are you protected if the partnership becomes untenable?

Again, having an investment partner is a great option, but being open, honest, and thorough when assigning duties and tasks is crucial to maintaining a good relationship.

  1. Prepare for negotiations

Negotiations are a vital part of every property transaction. Starting with securing finance, to the purchase of the property, to dealing with any maintenance/construction, to finding the right tenants. You need to understand the negotiation process and be prepared before you dive in.

Don’t want to deal with the stress of negotiation? Then let our buyer’s agent services negotiate expertly on your behalf instead. It’ll save you time, stress and money.

  1. Be finance ready

Obtaining pre-approval for a home loan is free, easy and will probably end up saving you money. Receiving pre-approval and knowing your budget means you can negotiate from a position of strength and help you secure a great deal.

Our blog post “Why being finance ready pays dividends” is worth a quick read.

Need help with your first investment property?

Your chances of making a profit when you buy your first investment property are significantly increased when you work with experts who understand the investment property industry.

At Capital Properties, our mission is to guide you in your property investment journey and support you to make the best property decision. We’re always available to chat and offer helpful information, so book a free Discovery Session today and let us help you work towards your future financial security.

Capital Properties

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