The First Home Loan Deposit Scheme was announced by the Coalition in May 2019, just one week prior to the federal election. The promise was quickly matched by the Labor party.
The scheme came into effect on 1 January 2020 and allows eligible first home buyers to get a home loan with a deposit of just five per cent of the value of the property. These buyers will be exempt from paying Lenders Mortgage Insurance – instead, the government will guarantee the balance of the loan and cover the mortgage insurance.
Details of the scheme are as follows:
– The scheme is available to singles on a taxable income up to $125,000 and couples on a combined taxable income up to $200,000. Loans must be principal and interest, and they must be for owner-occupied property only.^
– Eligible buyers can only access the scheme for properties valued up to a certain amount. These price thresholds vary according to location – the table below^ summarises these amounts:
*Regional centres included have a population over 250,000.
– There are only 10,000 loan guarantees available per year and they will go to the first 10,000 successful applicants.^
– Only two big banks will be able to take part in the scheme; NAB, and Commonwealth Bank. The rest of the loans will be provided by smaller lenders including CUA, Australian Military Bank, MyState Bank and P&N Bank who are all on Smartline’s panel.
The government hopes that eligible first home buyers will be able to save for their first home in half the time as a result of the scheme.
Please don’t hesitate to contact me if you would like to find out more.