HomeBuilder — What is it and am I eligible?
Earlier this year, the Federal Government announced a new grant targeted at stimulating the building industry. HomeBuilder provides eligible owner-occupiers with a grant of $25,000 to build a new home or substantially renovate an existing home. HomeBuilder differs from most other Government home ownership incentives as it is not restricted solely to first home buyers - anyone building a new home or renovating an existing home (provided they meet the guidelines outlined below) is eligible to apply.
Queensland Country to accept HomeBuilder Grant as part of your deposit
One of the most commonly asked questions about the grant is, “will my bank accept HomeBuilder as part of my home loan deposit?” While many banks have chosen not to allow HomeBuilder to form part of your deposit, at Queensland Country Bank, we’re proud to be one of the lenders in the market that is answering this question with a resounding yes!
Applicants will still need to show genuine savings or accumulated equity in their existing property of 5%, however Queensland Country will take the HomeBuilder grant into consideration when calculating how much deposit a borrower will require when financing their new home or renovation.
This could result in significant savings for you if Lenders Mortgage Insurance is not required and could also mean we’re able to offer you a lower interest rate on the money you are borrowing.
Why is accepting HomeBuilder as part of my deposit important?
The simplest answer to this question is that the more deposit you have, the less your loan will be, and the lower your loan amount, the less interest you pay over the life of your loan.
But from here it gets a little more complicated depending on your personal situation.
One of the key questions a lender like Queensland Country Bank needs to determine when you make your home loan application is how much deposit you will have. If your deposit is less than 20% of your home’s value, you are required to pay Lenders Mortgage Insurance.
The cost of Lenders Mortgage Insurance varies depending on how much deposit you can contribute towards your property purchase - the closer your deposit gets to 20% of the property’s value, the less Lenders Mortgage Insurance you pay. By choosing a lender that allows you to use HomeBuilder as part of your deposit, you’ll have the opportunity to increase that all-important deposit percentage and potentially save yourself thousands of dollars in Lenders Mortgage Insurance.
Let's do the math!
LMI = Lenders Mortgage Insurance
If you have a higher deposit, but not quite 20%, using HomeBuilder as your deposit might help you avoid Lenders Mortgage Insurance altogether. Using a similar example to above - purchasing a home for $400,000 - if you had a deposit of $70,000 your deposit would represent 17% of your property’s value. You’d pay much less Lenders Mortgage Insurance than the previous example because your deposit is closer to 20%, but it would still be a cost you would need to plan for. By using HomeBuilder as part of your deposit, your contribution would now be 23% of the value of your property - meaning you’d avoid Lenders Mortgage Insurance altogether.
But it’s not just Lenders Mortgage Insurance that you might be saving when you use HomeBuilder as part of your deposit.
Like many other lenders, Queensland Country offers our lowest interest rates to borrowers that have at least 20% deposit. For example, if you were considering a two year fixed loan to finance your new home or renovations, and have a deposit of 20% or more, you’d qualify for our Special Package Two Year Fixed Loan, which offers a competitive rate of only 2.29%p.a. (Comparison Rate 3.84%^). For a comparable Ultimate Home Loan Package two year fixed rate loan for borrowers with a deposit of less than 20%, the rate increases to (a still competitive) 2.79% (Comparison Rate 4.13%^). In addition to avoiding Lenders Mortgage Insurance costs, on a loan of $380,000, this lower interest rate could save you tens of thousands of dollars in interest over the life of your loan.