First Home Deposit Scheme is back!

An additional 10,000 First Home Loan Deposit Scheme places become available from 1st July. With the recent build incentives from both state and federal governments they are not anticipated to last long.

The First Home Loan Deposit Scheme was launched in January 2020 to assist Australian citizens in getting into their first home. The incentive launched with an initial 10,000 places available through 27 different lenders is administered by the National Housing Finance & Investment Corporation, the first allocation was fully subscribed in the middle of June. 

The scheme will be allocated on a first come, first serve basis, Housing minister Michael Sukkar says that while there’s no set number of deposit guarantees per state, the government will keep a close eye on demand to further shape the scheme. “We’re not adding any layers of bureaucracy,” he told reporters. “These are guarantees that banks are able to offer to customers. The banks will undertake the same credit checks, the same lending criteria that they would otherwise.”

If you were to purchase a home today, you’d need to have 20% of the property’s value saved as a deposit to secure a home loan or pay Lenders Mortgage Insurance. 

Eligible buyers will be able to purchase with a 5% deposit without the need for lenders mortgage insurance. The scheme will assist some of the 100,000 first home owners entering the market each year. There is a strict eligibility criteria with applications only available to Australian citizens and restrictions on purchase price and an income cap. 

If you were to purchase a home today, you’d need to have 20% of the property’s value saved as a deposit to secure a home loan or pay Lenders Mortgage Insurance. 

Eligible buyers will be able to purchase with a 5% deposit without the need for lenders mortgage insurance. The scheme will assist some of the 100,000 first home owners entering the market each year. There is a strict eligibility criteria with applications only available to Australian citizens and restrictions on purchase price and an income cap. 

So, what are the real benefits of the scheme? 
  • Get on the property ladder quicker
  • Save on lenders mortgage insurance. Based on a $400,000* purchase in WA, with a 95% loan this could save between $12,312* and $14,600* depending on the lenders mortgage insurance premium (as these are different with each lender – some use their own insurance, QBE or Genworth)
And the cons… 
  • Restricted to purchases under $400,000 (in Perth)
  • Income restrictions

To be in with a chance of securing a place in the new allocation it’s important to be prepared.  The process to apply is initially to get a reservation with one of the participating lenders (5000 will be given to CBA and NAB and the additional 25 lenders will have the remainder). 

With the income cap based on 2019/2020 income it may be prudent to get your tax returns completed as soon as possible. 

 

       Get prepared, here’s what you will need to         reserve a place: 

  •  Notice of assessment
  • Proof Australian citizenship
  • Copy of Medicare card
  • A first home buyers declaration

Need some help to see if you qualify? Contact the team and book your appointment today. 

*Figures are for general information only and are based on a qualifying purchase at $400,000 and the purchaser being an Australian citizen/permanent resident and also being eligible for the First Home Owners Stamp Duty Rebate. Lenders mortgage insurance premiums vary form lender to lender and premiums vary dependent on loan to value ratio. 

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