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TELL ME ABOUT: THE FIRST HOME LOAN DEPOSIT SCHEME
29th October 2019
Exciting news for first home buyers... The Australian Government has released the draft of the First Home Loan Deposit Scheme, set to commence in January next year.
So, What is the First Home Loan Deposit Scheme?
Essentially, the Government will waive the need for First Home buyers to pay Lenders Mortgage Insurance (LMI) if their deposit doesn’t meet the 20% most lenders require by guaranteeing the loan instead, reducing the savings required from 20% to as little as 5%.
Who is eligible?
You - must be a first home owner earning a maximum $120,000 p.a. for a single or $200,000 p.a. in total for a couple. Historically with these schemes, if it’s a couple purchasing the home, neither member can have owned a principal residence previously.
The home - you purchase must be under the price threshold for your area – The threshold for the Gold Coast is $475,000 (QLD – Regional Centres) and Tweed Coast $450,000 (NSW – Rest of State). Follow the link to the press release below for other areas.
The Loan – must be an Owner-Occupier loan paying principal and interest. The government will limit the benefit to 10,000 loans each financial year on a first-in, best-dressed basis.
How will it work in practice?
Assuming you meet the criteria above, let’s consider a home that costs $450,000. Currently you would need a deposit of $90,000 (20%) to avoid paying LMI. Under this scheme, your deposit could be as little as $22,500 (5%) saving you a whopping $14,912* in LMI!
Note this example does not include Stamp Duty, Government, legal and other fees estimated to be approximately $10,000* (in QLD).
All government schemes will always have their critics but a great opportunity to get onto the property market for those who qualify.
For full details of the details released click here http://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/supporting-first-home-buyers-1