Don’t qualify for HomeBuilder? Here’s an Alternative!

29th Sep, 2020 | Construction Loan

In this article:
Not everyone is eligible for the HomeBuilder grant. Here's a look at the challenges, a possible alternative and things to keep in mind before you consider applying for the grant.

The HomeBuilder Grant has been receiving great response. But there are circumstances where this grant may not be the best way forward for you. Here’s a look at  possible challenges and an alternative you should consider if you are looking to apply for the grant.

 

Challenges 

  • Only Australian Citizens can apply: So, if you are not a citizen and are on any other kind of work visa or even are a permanent resident you are ineligible for the grant.
  • Contract date and Builder Requirements: You must sign the renovation or construction contract between July 4th and Dec 31st. Further, construction must commence within three months of the signing of your contract. Given the phenomenal response, it may just be possible that you don’t find a builder or renovator that can fulfil this requirement. Additionally, the builder you choose must be a licensed one.
  • Renovation Amount: To qualify for the grant, you would need to spend a minimum of $150,000. This is a substantial amount that may unnecessary for the level of renovation you may be considering.
  • Construction and Renovation Limitation: You can use the grant only to improve the liveability of your property, e.g. kitchen and bathroom renovations. Additions that are not connected to your core property like swimming pools, garages and sheds are excluded.
  • No lender involvement: Banks have no process to allow borrowers to use the grant as funds to complete their build. Prospective borrowers need to connect directly with the respective state government.
  • State government processing times: There is a good deal of waiting involved. Getting approval from the state government takes up to two months. The grant is only received when you pay your contractor’s first invoice.

Whether it’s your dream home or a cosy cabin, we’ll find you the right loan.

The Alternative

It is best to consider the grant if your budget is in line with or over the grant’s construction and renovation limit of S150,000. Avoid borrowing or initiating renovation/construction projects just to qualify for the grant. If your budget for renovation or construction is no-where within the range of the grant spending limit, look at  a personal loan.

The Pros and cons of opting for a personal loan instead 

  1. Pros: 
  • There is no minimum spending limit
  • The right kind of personal loan could be affordable and light on your pocket
  • The application process is straightforward, and the turnaround time is quick
  • You don’t need to be a citizen to apply for it
  • There are no limitations on the kind of renovation or construction when you opt for a personal loan. In other words, you can use this loan for the building of swimming pools, garages, sheds or any other amenity that isn’t connected to your core property
  1. Cons
  • It is not a free grant but a loan and therefore an expense
  • In addition to this expense, you must pay for the interest that capitalises on the loan amount

How to decide if you should consider the grant?

  • Do a quick check of your financial circumstances and analyse if you can afford to spend $150,000 to $750,000 on construction or renovation.
  • Would you like to spend a minimum of $150,000 to receive a $25,000 grant?
  • Check if you are likely to see any capital-gain from this kind of an investment on renovation or construction.
  • Seek the professional advice of a mortgage broker. If you are not likely to benefit much from the grant, your broker will provide you with viable personal loan alternatives.

Reach out to us for the best match as per your circumstances.

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