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First Home Guarantee Scheme: how does it work?
You may be eligible to purchase your first home with as little as 5% deposit via the First Home Guarantee Scheme. Here’s how it works.
First Home Guarantee Scheme: financial support for first home buyers.


The First Home Guarantee Scheme is an Australian Government initiative to support eligible first home buyers to buy a home sooner. Under the First Home Guarantee Scheme, the Government will provide a limited loan guarantee of up to 15% of the home value. This may enable you to buy your first home with a deposit of only 5%1 and no lenders mortgage insurance (LMI) will be payable.
In 2024/25, 35,000 home loans are available under the First Home Guarantee Scheme.
Key points of the First Home Guarantee Scheme
•    You’ll need to earn less than the income limit and meet other eligibility conditions.
•    The purchase price will be capped, depending on the property’s location.
•    You need to move into the home as your main residence within certain timeframes. 
Who may be eligible for the First Home Guarantee Scheme?
To be eligible for the First Home Guarantee Scheme, you must:
•    be an individual or two joint applicants
•    be an Australian citizen or Australian permanent resident aged 18 years or older
•    earn a taxable income of less than $125,000 p.a. (for individuals) or $200,000 p.a. (for joint applicants combined), based on the last financial year
•    be a first home buyer or not have owned Australian real property (including land) in the last 10 years
•    intend to be an owner occupier of the purchased property
•    be purchasing a home (both newly built and established properties qualify under this scheme).
For more information about the types of properties that may be eligible and important timeframes, see housingaustralia.gov.au.


What types of homes can I buy with the First Home Guarantee Scheme?
Under the scheme, you’re able to purchase an eligible residential property which includes:
•    an existing freestanding house, townhouse or apartment
•    a house and land package
•    land and a separate contract to construct a home
•    off the plan townhouse or apartment.
Certain requirements apply depending on the type of property and contract you’re entering into.
What are the property price caps for the First Home Guarantee Scheme?
Caps apply to the purchase price to ensure participation is spread fairly across the country. The capital city price caps will apply to large regional centres with a population over 250,000, namely the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong.

Price caps for 2024/25
State/territory         Capital city         Rest of state
NSW                          $900,000                $750,000
VIC                             $800,000               $650,000
QLD                           $700,000               $550,000
WA                            $600,000                $450,000
SA                             $600,000               $450,000
TAS                           $600,000               $450,000
ACT                           $750,000    
NT                             $600,000
Jervis Bay Territory    $550,000

Norfolk Island           $550,000
Christmas Island       $400,000
Cocos  Islands           $400,000

What’s the downside of the First Home Guarantee Scheme?
While the First Home Guarantee Scheme may help you buy your first home sooner, you need to keep in mind that a smaller deposit means a bigger loan. And a bigger loan means bigger loan repayments, as well as higher total interest payments over the life of the loan. It may be the case that the additional interest payable outweighs the LMI savings. To find out whether the First Home Guarantee Scheme is right for you, you may want to speak to a financial adviser.
Also, if you move out of your home for an extended period of time and rent your home out, the loan may no longer be guaranteed by the Government. You may need to pay additional fees and charges, as well as LMI, depending on factors such as the value of your home and your outstanding debt at that point.
Which lenders are participating and how do I apply?
Applications can be made directly via one of the approved lenders or their authorised representative (such as a mortgage broker). Housing Australia has authorised a specific panel of participating lenders to offer the Home Guarantee Scheme to home buyers.
What lending rules apply to the First Home Guarantee Scheme?
You’ll need to meet your lender’s normal credit criteria to ensure you can service a loan of up to 95% and provide evidence you’ve saved the 5% deposit. Loans must be principle and interest (not interest only) and terms can be up to 30 years.
What other assistance programs are available?


The First Home Guarantee scheme complements (but doesn’t directly interact with) other Government assistance programs. These may include the:
•    First Home Super Saver Scheme, where you could save for the deposit on your first home in the concessionally taxed superannuation system.
•    First Home Owner Grant, which offsets the effect of Goods and Services Tax on buying or building a home.
•    State and Territory based stamp duty concessions.
1 Individual lenders may require a larger deposit, based upon lending criteria and your personal circumstances.

Source: MLC
 

Financial tips when starting a new job
Whether you’re starting work for the first time or you’re changing jobs, there are key things to know and do. 


1.    When negotiating pay for the role, pay close attention to the remuneration package. 
The more you earn, the easier it will be to save and invest more. So, before you accept the role, ask if they can raise the starting salary. It is unlikely you will get a review within 12 months so you could miss the annual review time and it may mean waiting much longer than 12 months. If this is not possible, you could try to negotiate an earlier review time. 
2.    Be very clear about your salary package. Is super included in the pay quoted to you or is it an addition? This makes a difference to the amount you take home. And if the super rate is changed, you might find it eats into your take home pay.  
3.    Upon starting, you will be asked for your bank account details and super fund details. It’s a good time to consider your choices. 
Is your bank account the best one for you? 
Should your pay be deposited into an offset account if you have a mortgage? This is a great strategy to reduce the interest you pay on your mortgage. 
If you don’t have an offset account, or a mortgage, consider setting up a special high interest savings account to deposit a percentage of your pay into before you start earning your new salary. This way you will be building your savings without really feeling it. 
Where is your super going? If you haven’t had a job before, you might want to find a super fund that is relevant to your industry, is a brand name you are familiar with, or you may have found one on the super comparison sites. 
And while we’re on super, should you add a little more into your super from your pre tax salary? Just make sure you are not going to contribute more than the $30,000* of concessional super you are able to contribute annually. 
Check with your employer when they pay your money into your super fund and be vigilant about checking that you are receiving it. In 2023, the ATO estimated there was around $3.4 billion of unpaid super each year – money that employers are not paying their employees.


Don’t jump into big expenses
Remember, most jobs will have a probationary period of typically between three to six months during which time you may be terminated with only a week’s notice. Keep this in mind before signing up to any debt or big ticket purchases during that period. 
The first thing when people are starting a new job is to look at superannuation. What is the default fund? Is it suitable? Choosing a super fund is hard, there are so many, and they are so similar. 


There are four main things to consider. 
1.    Look at the fees. You don’t want fees to eat away at your balance but you don’t necessarily want the cheapest if they don’t have features you want – such as online access or being able to choose your own investment mix.
2.    Do they offer insurance? For some of us, this is the only insurance we’re going to have. If you’re under 25 you might not have dependents but it’s a good time to make sure you have Total Permanent Disability (TPD) insurance which is often packaged with life insurance. TPD covers accidents or illnesses which will prevent you ever working again. Being insured could make a meaningful difference to your life in these situations.
3.    Are there investment options that suit you? For example, if you want to invest in sustainable options, does your fund offer them?
4.    Are you able to log in easily and be active? Can you see your balance, change your investment options, update your insurance?
Making your salary last 
Salary packing is something else to consider, especially if you are working in a charity or a hospital where there are certain FBT exemptions. 
Talk to your accountant, adviser or HR representative if you are in these occupations. 
For some people there is an opportunity to pay an amount of pretax earnings into their mortgage. Others may choose to spend on dinners, utilities and a range of other expenses.
Be sure that you do the research to make sure you understand all the implications, especially with offers such as novated leasing. These obligations can bite over the long run. 
Other benefits 
Wherever you are working, ensure you make the most of opportunities that are offered. This might include an annual training budget – tap into this to ensure you continue growing your skills – or a mental health day.

*From 1 July 2024, the concessional contributions cap is $30,000. From 1 July 2021 to 30 June 2024, the concessional contributions cap for each year was $27,500.

Source: Money & Life
 

Cost of aged care at home

Watching your ageing or frail parents or loved ones struggle with some of life’s basic activities such as cooking, cleaning or caring for themselves can be difficult – and yet they will invariably want to retain their independence and live in the comfort of their own home as long as possible.

It’s at this point many people start to investigate the various home and aged care options available.

Home care services can range from assistance with personal care and domestic duties, to the provision of transport or nursing services – basically, any form of care that your loved one can receive, that helps them to continue to live (mostly) independently in their own home.

Aged care can involve your loved one receiving home care, community support or moving into a more traditional residential aged care or nursing home facility.

All forms of care require careful consideration and come at a cost – some of which may or may not be subsidised by the government.

What are the indicative costs of professional home care?

The Department of Human Services’ My Aged Care site provides detailed information about the costs associated with home care packages.

It suggests that if you are thinking about a home care package, you’ll first need to have your loved one’s care needs assessed by the Aged Care Assessment Team (ACAT) as soon as possible. Your loved one must be assigned a home care package to receive government subsidies. The value of the home care package will depend on the level of care your loved one needs. 

Home care providers may then charge three types of fees – the basic daily fee, an income tested fee and potentially fees for additional services.

All recipients of home care packages will pay the basic daily fee. The basic daily fee for a home care package is up to 17.5% of the basic single age pension rate, which is $12.75 per day (in July 2024). The fee will depend on the package level received and it changes with increases to the age pension every 20 September and 20 March. Those on full pensions will only pay this fee.

Those on part pensions and self funded retirees may also pay the income tested care fee in addition to the basic daily fee. This fee is different for everyone because it is based on individual income levels, but the maximum amount of income tested care fee that your loved one can currently be charged, is $18.30 per day for part pensioners and self funded retirees with income up to:

  • for single with income up to $63,559.60 p.a.
  • for partnered with income up to $48,588.80 p.a.
  • for partnered but separated due to illness with income up to $62,883.60
  • or $36.60 per day for people with income above those thresholds.

The care provider may also charge to the home care package administration, case management, and other costs agreed to in the Home Care Agreement. Amounts that exceed the value of the home care package, and any additional services excluded from the Home Care Agreement, must be paid for by your loved one.

Some issues with relying on government funded home care

There can be complications when applying for government funded home care packages, which may mean your loved one will need to fund these services out of their own pocket.

For example, your loved one might have an accident, illness or sudden loss of capacity, and they may require home care sooner than the government funded options are able to provide.

There can be long waiting lists for government funded home care due to the limited number of packages available – even if you are approved for home care due to health, it doesn’t mean you’ll be able to access it straight away. Home care packages are assigned by order of priority to those who most need the services and the time they have waited for care, and it’s done nationwide. If you notice your loved one is starting to struggle or become ill, it may be worth exploring home care options sooner rather than later and get your loved one assessed as soon as possible.

Options for privately funding home care services

If your loved one is ineligible for a home care package, or is on the waiting list, there are a few common ways to fund these services.

Commonwealth Home Support Programme

The Commonwealth Home Support Programme is another government subsidised program which provides home help for people over 65 (or over 50 and identify as Aboriginal or Torres Strait Islander, or on a low income, homeless or at risk of being homeless) who need some help with daily tasks to live independently at home.

Under this program, a home support assessment is required – and it provides access to domestic help such as cooking, cleaning, bathing, driving to the doctors and doing the shopping.

While contributions towards specific services under this program are not fixed, these are substantially cheaper than if services were to be engaged at commercial rates. There are arrangements for those who cannot afford to make contributions.

Drawing down savings or accessing equity in your home

Drawing down on savings is another way some people choose to fund home care if they’re not eligible for any of the government funded options.

If this is the option you’re looking at for your loved one, it’s worth speaking with a financial adviser to figure out how age pension entitlements may be affected and ensure that savings are best structured to continue earning the highest returns possible, whilst funding home care services.

Drawing down on the equity in yours or your loved one’s home is another potential option to access funds – again, it’s recommended to speak with a financial adviser to understand the implications of this strategy.

Accessing superannuation through compassionate grounds

In some circumstances, the Australian Taxation Office (ATO) can approve the early release of a portion of superannuation on compassionate grounds to pay for medical expenses, mortgage repayments, disability, or palliative care for a person or their dependant.

For the payment of medical treatments to be approved, the person or their dependant must have a life threatening illness or injury, acute or chronic pain or an acute or chronic mental illness. The applicant must also be able to show that they can’t pay for the treatment any other way, such as selling assets or using savings.

Adult children helping their parents out

Increasingly, adult children are helping their ageing parents who are perhaps asset rich and cash poor, by making money available to them to pay for home care.

Depending on the amount of money required to fund home care, some adult children negotiate with their parents to buy a stake in the parents’ home to free up cash, while others will simply lend their parents money with an agreement to ensure the loan is paid back at some point, usually when the home is sold or from the parent’s deceased estate.

As with any important financial and life decisions, it’s worth starting the discussions about home care options – and their financial implications – with aging loved ones sooner rather than later.

Your financial adviser or specialist care providers can give you further advice specific to your loved one’s situation.

 

Document sources:

1. My Aged Care - Help at home
2. My Aged Care - Commonwealth Home Support Program
3. Australian Taxation Office (ATO) – Early release of superannuation
4. Department of Health - Schedule of Fees and Charges for Residential and Home Care

 

Source: BT

Grow your retirement income
In retirement, every dollar counts and it is worth exploring different strategies to grow your retirement income. Here’s how do it…


Use your super wisely
If you’re about to retire or are in retirement, it can be tempting to take your superannuation as a lump sum payment. However, this means taking money out of a tax-friendly environment and potentially placing it in investments that could attract tax at higher rates.
An alternative is to use your super savings to purchase a retirement income stream called an ‘account based pension’ or allocated pension. The earnings of an account based pension are tax-free and you enjoy a regular source of cash in much the same way your wage or salary was paid during your working days.

Review your super investment mix
If you choose to leave your super savings in the superannuation environment, it is important to review the way your super is invested at least annually. It can be tempting to switch all your super to low-risk investments but without some exposure to higher risk ‘growth’ assets like shares and/or property, your super savings might not benefit from potential capital growth.

Consider age pension entitlements
Depending on your assets and income, you may be entitled to receive a full or part payment of the age pension. Even a small part payment could see you entitled to a range of concessions including discounts on council rates and other benefits.
If you are a home owner, your family home could be your most valuable asset – worth more than even your superannuation. Your home equity can provide a potential source of funds in retirement, and you may not have to sell up or move in order to benefit from that equity. 

Think about using home equity
Your financial adviser can discuss possible options to access home equity in retirement.

Source: BT
 

Pulse checking your finances


Your financial health is key to the health of your wellbeing, relationships, work and home life. 
It’s important to have a regular checkup of your financial position to ensure you’re on track and to confirm your money is where you think it is, your investments are performing as they should, and debts are regularly serviced and not growing.

A financial plan will generally work around three basic savings accounts:
•    A buffer account which would ideally allow for three to six months of expenses.
•    A short term savings account for large expenses such as a holiday, renovation, home deposit and school fees. 
•    A long term account where you save for big ticket items like property. 

And then there’s your superannuation account. 

Each time you do a pulse check, check each of these accounts to ensure they are still working towards your goals. At the same time, it’s important to review your outgoings to make sure you’re moving forward and not falling behind. 

When to check 
Now is a particularly important time for pulse checking. Currently, around 5 per cent of mortgage holders in Australia are spending more than they earn on repayments and other living expenses, according to the Reserve Bank. 
People have been meeting their shortfall through savings made during the pandemic, but overall their reserves are now falling below the six-month buffer.
You should conduct a pulse check at least once a year. This is where you review your budget – what you’re spending and earning. 
Consider if you have underestimated or overestimated your spending – and adjust it accordingly.
It’s an awareness piece. Really look at the information and investments like super – is it what you were expecting, has anything changed in the way you want it invested?
Ask yourself: how are you meeting your financial goals? Is your plan on track? How are your long term savings growing? 
This is also a good time to review if anything has changed in your life – new relationship, new job, children, moving house, death in the family or divorce. If any of these have changed then you need to review your full plan and account for those life changes, including updating any beneficiaries.
The pulse check should also include making sure your super contributions from your employer have been paid into your super fund account. Companies often pay quarterly so it’s important to make sure nothing is missed. If there are any issues here, it’s best to know as soon as possible. We’ve all heard horror stories of companies going broke and not paying staff entitlements like super. It’s your money, you’ve worked hard for it and earned it – don’t lose it. 
Retirees tend to have a good idea of what’s going on with their finances but people in the accumulation stage need to consciously keep a plan and budget. 
The more organised you are and the better your habits, the better your chance of financial success. 
People need to have a pulse check at least annually, but probably every six months just to check how the plan is going.
For example, someone might have an emergency fund of $40,000 which is sufficient if it remains there. But when it starts going down for purchases that might not be emergencies, there needs to be a conversation – is this a genuine emergency or is the spending no longer following the plan?
There also needs to be a check in that you and your partner are on the same page.

Overspending can happen to anyone
Over time, it can be high earners that are not good with savings, so if you fall into this category, make sure it doesn’t get out of hand.
A pulse check is important for everyone at every stage of life and making sure you have it scheduled regularly is important because it’s when you leave things unchecked that a previously strong financial position can retreat.

Source: Money and Life