An article written by John Warlow
A new Federal Government scheme should make it easier for some first home buyers to secure a home loan with no lender’s mortgage insurance (LMI) and only a 5% deposit. But unfortunately the scheme is fairly limited.
Securing a home loan as a first home buyer can be tricky following the Banking Royal Commission. Faced with the prospect of saving a 20% deposit to secure a loan, first home buyers need a helping hand more than ever.
Managed by the National Housing Finance and Investment Corporation (‘NHFIC’), the Federal Government’s First Home Loan Deposit Scheme came into force on 1 January 2020. Availability is fairly scarce however.
CLICK THROUGH FOR THE FIRST HOME LOAN DEPOSIT SCHEME FACT SHEET
The scheme is only available for up to 10,000 eligible applicants per financial year – roughly 10% of first home buyers. Eligibility requirements for the scheme such as age, prior property ownership status, income, property price and citizenship need to be demonstrated to the NHFIC by an applicant’s bank or finance broker.
Whilst the scheme is generally positive for first home buyers, the NHFIC will only act as guarantor whilst the applicant lives in the property. As a result, if an applicant moves out to rent the property the applicant loses the guarantee and could incur fees and charges in relation to their loan and LMI.
Thankfully, the scheme can also be used in conjunction with other first home buyer Government programs such as the First Home Super Saver Scheme, First Home Owner Grants and stamp duty concessions.
For more information contact Brooke Bostock (Ph 3002 7418 / bb@warlowscott.com.au), Georgia-Rae Swain (Ph 3002 7426 / grs@warlowscott.com.au)
