First Home Owner Grant (FHOG) & First Home Bonus (FHB) -

Hi VJ. In all the paperwork my lender sent me there was a form that I had to fill out to direct the FHOG. I elected to use mine to pay part of the frame stage invoice, to avoid drawing down on the loan completely until the end. At the end of construction I can then nominate whether I want the surplus funds to be applied to my mortgage or whether I want the money redirected somewhere else - my bank account or someone else's. But for my lender (Aussie) those were the only options - either use it during construction to pay one of the invoices (or part of it) or wait until construction is finished.

A friend who borrowed through Members' Equity (ME) got hers at the end of construction. When she called to enquire about it ME told her that they hadn't used it towards any of her progress payments because she hadn't asked them to, so I guess she had a form for it too and didn't realise.

Another friend has borrowed from the Commonwealth Bank (I think) and they released the surplus funds to my friend early in the building process. However, she needs to use most of the grant to pay for her LMI and to finish construction so the CBA only released the amount that is left after those expenses.

To my knowledge they had received the grant from the SRO and I guess they keep it in some sort of holding account because no, I never saw it in my account.

I sent them the drawdown request for frame stage, which for the sake of this explanation I'll say was for $13,000 (I wish lol). With the drawdown request I also sent them the form directing them to use my FHOG to pay this invoice.

They initially did a direct deposit to Zuccala for $1,000 and my loan balance increased by $1,000 - so that's the amount they took off my loan.

Then a few days later Zuccala notified me that they had received the remaining $12,000 by EFT from Aussie. But that amount has never been in my loan account nor taken off my loan account (to my knowledge... this payment was only made a few weeks ago so I haven't received a statement for it). The letter I received from Aussie after the payment of that invoice just said they had paid the $1,000 and that increased my loan balance by $1,000. But I have a receipt from Zuccala saying the whole invoice has been paid.

However, although I never saw the $12,000 deposited into my loan account, it is "there" in that I won't have to drawdown that amount at any point to pay an invoice from Zuccala, so at the end of construction the $12,000 will still be there for me to either use for after handover expenses or I can choose to leave it in the account for as long as I like.

I hope that makes sense.... if it doesn't... say I had a loan for $100,000 (again, I wish) and my house and loan fees were costing exactly $100,000. Because I've used the FHOG to pay part of one of my invoices, at the end I will only have used $88,000 of my approved loan amount to build my house. So that $12,000 surplus funds is mine to use as I please, I just have to tell my lender what pleases me.

Colleen,

Thank you so much for the very detailed explanation

I understand it now.



That was the example that I gave to our broker when I was talking with him re: this... but he couldn't explain it properly.
He might not be familiar with how the FHOG is being used by banks.
He just said that it's the norm with banks to hold the money.

Anyway, at least now I understand how it would work. I just have to instruct the bank to use the grant to pay part of the frame invoice.


This is what I was expecting to happen. That I would be seeing the $12K deposited to our offset account or credited to our Home Loan. But nothing like that happened. At least you saw it credit to your savings account.

Well, we really need to contact our bank on how the funds would be used.

Thanks Colleen and Ray.

Imagine having to think about it this weekend? I'll go crazy! and what a waste of time!
You're a great help!
I feel better now..
This forum has really helped us a lot!

Cheers to everybody here!

Yes, that's what I thought too.
We will ring the bank on Monday and ask if the grant was already released (as if I don't know), and if they say yes, I will then instruct them to apply the funds to our next invoice, which should be within next week (as S/S told us framing should be finished by Wednesday - hope so )

joaninhac,

thanks for sharing that info.
that's quite different - FHOG went straight to the builder.
normally it goes to the bank and then the bank would deduct the FHOG from the invoice.

well, since we held off paying our frame invoice (due to issues with the frame/slab), we haven't instructed our bank on what to do with our grant.

No, the extra grant has not been available for over a year, the FHOG has been around for lot longer than a year but the bonus part has only been for few months, part of Govt's economy stimulus idea.
So, the question is not whether the FHOG will continue after June, of course it will, but will it go back to the original amount (no announcement has been made to suggest otherwise) or will the bonus continue?

Financial experts are tipping that the grants won't decrease after June 30 - after all, governments at all levels want to stimulate the economy, and that includes the building industry. If that is the case, there won't be any announcements until the eleventh hour - otherwise, people will hold off on signing contracts and things will start to get even more shaky.

It's a bit like the special rule that existed for the purchase of new cars when the GST was introduced. Input tax credits for new car purchases weren't available in the first year, then were to be phased in over the next two or three years. The idea was to protect the car manufacturing industry from crashing and burning in the lead-up to the start of GST. If people thought they could get their new car cheaper after 30 June 2000, nobody would have bought one in the 7-8 months prior. Businesses would have put off replacing their fleet vehicles and the car industry would have gone all to hell. Shortly after GST started, the government revoked that special rule and allowed full input tax credits on new vehicles.....which was their intention all along, but they were never going to make that public knowledge.

We'll have to wait and see re the FHOG, but I wouldn't be laying any money on a major cutback.

Keeping the grant seems to make the most sense to me, as it will stimulate the local economies.

EG you have to use local tradies, and use the services of probably 50 different companies in the process of building (sparkies, their suppliers, etc.). And the vast majority of those will be local.

But then again, the grants we can get here are about 3-4 in total (FHOG, FHO bonus, building bonus, victorian bonus?) so your really relying on state AND federal grants, some of which may end.

If I understood another thread correctly, you only have a 45 minute window now in which to edit your posts.

Gotta be quicker next time, thlo

Yes, I agree - and there was quite a bit of discussion about this when people commented on features of new look forum, perhaps mods will re-think this one