WARNING: Read fine print before signing $25k home builder grant
Home buyers hoping to cash in on a $25,000 federal government building grant have been warned of some pitfalls of taking up the offer.
Last week, developers claimed unexpected growth in the new homes market was being driven by the federal government's HomeBuilder Grant announced in June, which gives home builders $25,000.
The HomeBuilder Grant is for those building a new home valued at $750,000 or less or those renovating an existing home with costs of between $150,000 and $750,000.
The money, which is not a loan and does not have to be repaid, prompted Logan trainee nurse Sam Formby to buy a property and get her foot in through the home market door.
But Logan finance broker Cara Giovinazzo warned buyers about the attraction of "free money" and said many had already risked making hasty and potentially costly decisions.
The owner of CGIO Finance at Loganholme said buyers unaware of the grant's conditions could end up falling into an investment trap that could cost them more in the long run.
One of the finer details many were unaware of is that the purchase contract must be signed between June 4 and December 31 this year with construction commencing 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 buyers were warned about was some builders and developers promoting the grant to ineligible buyers or buyers who would not meet the contract deadlines.
Ms Giovinazzo said land registered next year would not give buyers much time to start construction with the contract stipulating three months from signing to clear the site and start building.
"This can be problematic if you are expecting funds, but your builder has delays," she said. "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 the $25,000 grant, first home buyers in Queensland can get a $15,000 Queensland First Home Owners' Grant and those in regional Queensland can access the state government's $5000 Regional Home Building Boost.
Originally published as WARNING: Read fine print before signing $25k home builder grant