A word from Philip Webb

A word from Philip Webb

The Labor Government announced this week a proposed scheme designed to help Australians buy a home with a smaller deposit, a smaller mortgage and with smaller mortgage repayments. Sound familiar? You might be thinking of the Morrison Government’s First Home Guarantee Scheme, a similar plan put in place to make it easier for first home buyers to enter the market.

To help differentiate between the two, I have outlined the key information on who is eligible and what they can receive, below:

Help to Buy Scheme

  • Help to Buy will be open to 10,000 Australians per year.
  • Eligible home buyers will need to pay a deposit of 2 per cent, with the government contributing up to 40 per cent of the purchase price on new homes and up to 30 per cent of the purchase price of existing homes.
  • Targeted at lower middle earners with a taxable income of up to $90,000 and $120,000 for couples.
  • When the owner decides to sell, the federal government will get its money back and its share of the capital gain.

First Home Guarantee Scheme

  • First Home Guarantee Scheme will be open to 35,000 Australians per year.
  • Eligible home buyers will need to pay a deposit of 5 per cent (2 per cent for single parents) and the government will pay the remain 15 per cent (18 per cent for single parents).
  • The federal government does not own a percentage of your home.

While these two schemes sound similar, they do have their differences. To put it simply, the Coalition’s Home Guarantee Scheme focuses on the deposit, while Labor’s Help to buy Scheme helps with both deposits and mortgage repayments.

While it is positive the government is attempting to make owning a home more achievable, neither scheme is addressing housing affordability. In fact, they will only exacerbate the issue.