Choosing a Lender for the First Home Loan Deposit Scheme

First Home Buyers | 20 Dec, 2019

In our article of last week, we talked about the First Home Loan Deposit Scheme scheduled to open for applications on 1 January 2020. Since then, The National Housing Finance and Investment Corporation (NHFIC) has announced the full panel of 27 approved lenders, including 25 non-major lenders. That means that borrowers now have many more options for choosing a lender for the First Home Loan Deposit Scheme.

The scheme helps first-time home buyers into the housing market by allowing borrowers to obtain mortgages with a 5% deposit (where typically a 20% deposit is required). The government then pays for the lending mortgage insurance, which would normally be required to cover the deposit shortfall, rather than the buyer themselves.

Now, borrowers may be able to get into the housing market with deposit savings of as little as $12,500 in some parts of the country, and as little as $23,750 in Brisbane itself. This is a great opportunity for many first home buyers for whom a mortgage has remained just out of reach.

Of course, participation is still a time sensitive issue, with the NHFIC awarding loans to approved applicants on a first come, first served basis. But with so many options and so little time for understanding them, potential borrowers are left wondering whether they should stick with the two major banks on the panel or look to the 25 non-majors.

The 25 non-major lenders offer great options for first home buyers. Here’s why you should consider them when choosing a lender for the First Home Loan Deposit Scheme.

Choosing a Lender for the First Home Loan Deposit Scheme

Better Packages

Of course, for now there are only 10,000 mortgages on offer under the scheme. But of these 50% are guaranteed to be written through the non-major lenders.

This is fantastic news for first time buyers because many of these non-major lenders have dedicated home loan packages that benefit these types of buyers. In fact, many non-major lenders offer consistently competitive home loan packages with valuable inclusions (such as a 100% offset account on fixed rate loans) that aren’t offered by the major banks.

Having access to non-major lenders under the scheme means first home buyers can utilise the scheme without giving up the option to take up the competitive packages offered by these lenders to first home buyers in the normal course of business. So, you can take up the 5% deposit scheme, and get great inclusions as well.

Better Competition

Historically, the lack of transparency around discretionary pricing of residential mortgages by banks has made understanding your options more difficult. Of course, the more options that you have the better competition is generally, regardless of what it is that you’re purchasing.

The wide-ranging lender options available under the First Home Loan Deposit Scheme do increase competitiveness and can give you more of an edge to negotiate with potential lenders. This can help you ensure you’re receiving the best, most cost-effective mortgage possible.

Your broker will be able to give you advice on the most competitive packages for your specific situation. For example, we often use the suite of lenders under the Teacher’s Mutual Bank or Bank Australia for first home buyers as they offer competitive packages with great inclusions.

More Time to Apply

Non-major lenders will be taking applications from 1 February 2020, giving you a little extra time to understand your position and be ready to take advantage of the scheme. 

It’s important to remember that the government has capped the number of mortgages under the scheme at 10,000 with 50% of those coming from non-major lenders. If accessing the scheme is something that interests you, it is best to understand your position as soon as possible. Find out if you are eligible and determine your borrowing capacity. Then work with your real estate agent to find homes that fit both your personal brief and the scheme’s property criteria.

Being prepared gives you the best chance to get government support to buy your first home.

The Panel – Non-Major Lenders

  • Teachers Mutual Bank Ltd (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
  • Australian Military Bank
  • Defence Bank
  • Auswide Bank
  • Indigenous Business Australia
  • Bank Australia
  • Police Bank (including the Border Bank and Bank of Heritage Isle)
  • Bank First
  • Mortgageport
  • Bank of us
  • Community First Credit Union
  • Queensland Country Credit Union
  • Bendigo Bank
  • G&C Mutual Bank
  • Beyond Bank Australia
  • CUA
  • Gateway Bank
  • P&N Bank
  • MyState Bank
  • People’s Choice Credit Union
  • Regional Australia Bank
  • Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank)
  • The Mutual Bank
  • WAW Credit Union

If you’re a first home buyer interested in the First Home Loan Deposit Scheme, contact us. We can help you determine your eligibility, borrowing capacity and even help you complete all the paperwork.


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