1 January 2020 marked the start of the First Home Loan Deposit Scheme. The scheme allows approved applicants to take out a mortgage with just a 5% deposit and avoid paying lenders mortgage insurance. It was designed to create easier and faster access to the property market for first home buyers, and was an opportunity for many to enter a market that might have previously been just out of reach.
When it was first initiated there were only 10,000 mortgages on offer under the scheme. This was quite a small percentage when typically there are 110,000 first home buyers entering the property market each year. And as of late October, only four months after the Government’s announcement of the scheme, there were only 363 places left available.
The 2020-21 Federal Budget has changed that. Here’s how.
In the 2020-21 Federal Budget, the Australian Government announced 10,000 additional First Home Loan Deposit Scheme (New Homes) (or, FHLDS (New Homes)) mortgages. This announcement effectively expanded the First Home Loan Deposit Scheme eligibility from only entry level properties to include new home purchases. In other words, these new mortgages are specifically aimed at home buyers who are getting mortgages to build or purchase new homes or newly built homes, rather than existing dwellings.
Treasurer Josh Frydenberg gave his rationale for the extension explaining that the residential construction industry contributes about 5% to Australia’s overall GDP. He also stressed that it’s an essential part of boosting our economy.
He says, ‘Helping another 10,000 first home buyers to buy a new home through our First Home Loan Deposit Scheme will help to support all our tradies right through the supply chain including painters, builders, plumbers and electricians’.
These additional mortgages will be available from 6 October 2020 to 30 June 2021, and just like the initial support, will be given to the first approved applications (first in, best dressed). So, eligible first home buyers who want to try to access the benefits of the scheme should act quickly.
Just like the initial scheme, First Home Loan Deposit scheme eligibility requirements include location-based property caps. For Queensland, the Government originally set the eligible property price cap at $400,000 and in Brisbane, $475,000. Now they have expanded that to $500,000 in Queensland as a whole, and $650,000 in Brisbane.
The government has extended the caps for the other states and capital cities/regional centres as well. You can check your eligibility further on the National Housing Finance and Investment Corporation’s website.
The remaining First Home Loan Deposit scheme eligibility requirements continue on as before. This includes requiring that:
To find out more about the First Home Loan Deposit Scheme generally, including what it is and how it works, read here.
The government has still capped the number of FHLDS (New Homes) mortgages. So, if accessing the scheme is something that interests you, it’s best to understand your position as soon as possible. Find out if you are eligible and determine your borrowing capacity. Apply for the scheme, and then work with your real estate or buyer’s agent to find homes that fit both your personal brief and the scheme’s property criteria.
Being prepared means you’ll have the best chance at getting government support to buy your first home.
If you’re a first home buyer interested in purchasing or building a new home under the First Home Loan Deposit Scheme, get in touch. We can help you determine your eligibility, borrowing capacity and even help you complete all the paperwork.
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