The government’s $25,000 HomeBuilder grant has generated sustained conversation within the industry since its launch, with some groups actively praising the initiative, while others have highlighted its possible negative side effects.
Now, CGIO Finance owner Cara Giovinazzo has joined the dialogue, warning that while the grant may enable some to achieve their home ownership dreams, others are at risk of making hasty – and potentially costly – decisions as their judgement is clouded by the allure 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,” said the Brisbane-based broker.
“They need to tread carefully so it does not cost them more in the long run.”
The HomeBuilder grant gives certain owner-occupiers, including first home buyers, $25,000 to either 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 must be signed between 4 June and 31 December 2020, with construction commencing within three months of the contract date.
With Queensland having just opened HomeBuilder applications this month, Giovinazzo felt a need to highlight the risk of falling prey to “a poor investment trap”.
She emphasised that HomeBuilder funds are not released until the slab stage of a home project and, as such, 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,” Giovinazzo added.
“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.”
Giovinazzo cited customers with land not scheduled to be registered until next year as an example of a situation which would preclude said clients from receiving the grant.
“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,” she said.
Giovinazzo’s scepticism is not reserved for HomeBuilder alone. She also mentioned the $15,000 Queensland First Home Owners’ Grant, as well as the state’s $5,000 Regional Home Building Boost for Queenslanders in rural areas.
“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,” she said.
“But [they] need to tread carefully and not get caught out by contract deadlines or making poor purchasing decisions. It is really important to do research and get advice before making any major decisions.”
