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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! 

 

Without

HomeBuilder included in your deposit

With

HomeBuilder included in your deposit
Home value $400,000 $400,000
Minus 7% deposit $28,000 $28,000
Minus HomeBuilder n/a $25,000
Loan amount $372,000 $355,000
Revised deposit percentage n/a 13%
LMI cost $11,556* $4,787*

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 Variable Package (<80)~, which offers a competitive rate of only 2.49%p.a. (Comparison Rate 2.88%^). For a comparable Special Variable Package Rate loan* for borrowers with a deposit of less than 20%, the rate increases to (a still competitive) 3.14% (Comparison Rate 3.51%^). 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.   

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Need some more information?

If you’d like to know more about any of the information above, or simply want to discuss your homeowner ideas with our team, one of our Home Loan Specialist's will be able to assist. Call our team on 1800 075 078 or contact us online below.  

HomeBuilder rules and eligibility

To access HomeBuilder, owner-occupiers must meet the following eligibility criteria:

  • You are a natural person (not a company or trust);
  • You are aged 18 years or older;
  • You are an Australian citizen;
  • You meet one of the following two income caps:
    • $125,000 per annum for an individual applicant based on your 2018-19 tax return or later
    • $200,000 per annum for a couple based on both your 2018-19 tax returns or later
  • You enter into a building contract between 4 June 2020 and 31 December 2020 to either:
    • Build a new home as a principal place of residence, where the property value does not exceed $750,000; or
    • Substantially renovate your existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, and where the value of your existing property does not exceed $1.5 million;
    • Construction must commence within three months of the contract date

The Fine Print

~ The Lenders Mortgage Insurance costs detailed in this article are based on a mortgage insurance policy for an owner-occupied property in the state of Queensland purchased through Genworth Mortgage Insurance Australia Limited. Costs may vary depending on the loan purpose and the state the purchase is made in.


^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rate is calculated on a loan amount of $150,000 over a term of 25 years.

~Special Variable Package Rate (<80%)

Limited time variable rate under Ultimate Home Loan Package for new, principal and interest loans, minimum new borrowings of $100,000 and 80% maximum loan to value ratio. Rate includes a 2.00% discount off the Principal and Interest Standard Variable Rate for the life of the loan.

*Ultimate Home Loan Package

All interest rates quoted on this page are per annum and are only available under our Ultimate Home Loan Package. Total borrowings from Queensland Country Bank ('Queensland Country') must be $100,000 or more. Fees and charges are payable. Normal lending criteria, terms and conditions apply and are available on request. For new borrowings involving a new mortgage to Queensland Country. Not available for the restructure of existing Queensland Country loan facilities.

When assessing your loan application, you will be required to demonstrate that, in the event your HomeBuilder grant is declined or you are deemed ineligible, you have either additional deposit funds to allow you to meet our minimum loan to valuation ratio requirements, or you will have the capacity to qualify for Lenders Mortgage Insurance based on the reduced deposit.