Buyer Beware with HomeBuilder

Prospective home buyers eager to get into the market to take advantage of generous government incentives headed by the $25,000 HomeBuilder grant need to be cautious to avoid falling into a poor investment trap, says a Queensland broker.

Borro™ Owner Cara Giovinazzo said even though the HomeBuilder grant boosts the construction sector and enables people to achieve their home ownership dream, buyers can risk making hasty and potentially costly decisions because of the attraction of “free money”.

“The appeal of getting the grant might blindly encourage people to make poorly considered investment choices as they are so focussed on getting $25,000 for free,” Brisbane-based Ms Giovinazzo said. “They need to tread carefully so it does not cost them more in the long run.”

The HomeBuilder Grant provides eligible owner-occupiers (including first home buyers) a grant of $25,000 to build a new home valued at $750,000 or less or to substantially renovate an existing home for costs of between $150,000 and $750,000. The purchase contract needs to be signed between June 4, 2020, and December 31, 2020, and construction must commence within three months of the contract date.

While HomeBuilder was announced by the federal government on June 4 as part of measures to counter the economic impact of the COVID-19 pandemic, the Queensland government only opened applications this month for work commenced since June 4, or work waiting to commence.

Ms Giovinazzo said HomeBuilder funds are not released until the slab stage of a home project, which means most banks will not accept approval for the grant to be used as funds to complete.

“This means buyers in that situation will still need a deposit so they should talk to a mortgage broker regarding options as a few banks will accept it or can work around the delay,” she said.

“Another issue is some builders and developers are promoting the grant to clients when those buyers may not be eligible, or they know they can’t meet the contract deadlines.

“For example, if the land is not registering until next year, these clients can’t possibly start construction as you only have three months to clear the site and start construction from signing the contract.

“This can be problematic if you are expecting funds, but your builder has delays. If this happens, you must seek special consideration to still get the grant – and there is no guarantee that it will be approved.”

In addition to HomeBuilder, first home buyers in Queensland can get the $15,000 Queensland First Home Owners’ Grant, while regional Queenslanders can access the State Government’s $5,000 Regional Home Building Boost.

“This means first home buyers in regional Queensland can access up to $45,000 in grants to get into the property market, which is a massive incentive,” Ms Giovinazzo said.

‘But you still need to tread carefully and not get caught out by contract deadlines or making poor purchasing decisions. It is really important to do your research and get advice before making any major decisions.” Read More.

Achieve Your Financial Goals

We’re listening to your lending needs

Borro - Purple Phone Icon

Give us a call

Speak directly with one of our Borro™ brokers.

Borro - Purple Calendar Icon

Book an appointment

Choose a time and day that suits you best.
Borro - Loan Pre-Approval

Apply now

Get started quickly with our online forms.