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BUYING A HOME

What does the First Home Loan Deposit Scheme mean for you? 

9 September 2019


Buying your first home is a significant life event. Chances are you’ve been saving carefully for the deposit over a number of years while looking for the perfect place to call home. If you were to purchase a home today, you’d most likely need to have 20% of the property’s value saved as a deposit to secure a home loan. From January 1, 2020, things may get a little easier if you’re one of 10,000 borrowers eligible for the First Home Loan Deposit Scheme.

The Commonwealth government has allocated $500 million in the form of equity to the National Housing Finance and Investment Corporation (NHFIC). The aim is to make housing more affordable, and the pathway to first home ownership more achievable and faster. But what exactly is the First Home Loan Deposit Scheme, and what does it mean for you?

What is the First Home Loan Deposit Scheme?

Simply put, the First Home Loan Deposit Scheme will assist an eligible first home buyer to purchase a house with a 5% deposit. The government will provide a loan guarantee of up to 15% of the property’s value to individuals earning up to $125,000, or couples earning up to $200,000, per year. The scheme could also save you up to $10,000 in lenders mortgage insurance.

Eligibility for the Scheme will also depend on where you live. In a media release dated 27 October 2019, the government announced, “Property price caps under the Scheme set appropriate price thresholds in capital cities, large regional centres with a population over 250,000 and regional areas.”

These thresholds are listed below:

State/territory

Capital city and large regional centres

Rest of state

NSW

$700,000

$450,000

VIC

$600,000

$375,000

QLD

$475,000

$400,000

WA

$400,000

$300,000

SA

$400,000

$250,000

TAS

$400,000

$300,000

ACT

$500,000

-

NT

$375,000

-


The Government explained why higher caps will apply in some regional centres: “The capital city price caps will apply to large regional centres with a population in excess of 250,000, namely the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong, recognising that dwellings in large regional centres tend to be significantly more expensive than other regional areas.”

What does it mean for you?

If you’re an eligible first home buyer, you’ll only need a 5% deposit to apply for a home loan. The additional 15% will be provided by the NHFIC, and administered by an approved lender.

Applications for the Scheme are expected to open on January 1 2020. The NHFIC will be providing further details about the Scheme, including information about:

  • eligibility
  • participating financial institutions, and
  • the application and assessment process.2

It’ll also be consulting with relevant parties in the lead up to the Scheme’s commencement. To stay up to date, you could consider following the NHFIC on LinkedIn and Twitter.

Alternatives for financing your first home

The First Home Loan Deposit Scheme could make owning your first home more achievable. However, it’s worth thinking in detail about how the additional loan may impact you. Smaller deposits can often mean higher interest payments over time. If you feel you need advice, consult with a financial advisor before making any big decisions. The good news is that there are also alternatives to the Scheme, which could still pave the way for home ownership.

First Home Owners Grant

The First Home Owners Grant offsets the effect of GST on home ownership. It’s a national scheme that’s funded and administered by each state or territory. If you’re eligible, you could receive a one-off grant to assist you with the costs of buying your first home.

First Home Super Saver Scheme

The First Home Super Saver Scheme was introduced by the Coalition government in 2017-183. It allows you to save for your first home via your superannuation fund. Because super is taxed at a concessional rate, you’ll be able to save your deposit faster.

Suncorp is proud to support first home buyers to achieve their slice of the ‘Australian Dream’. But we also understand that buying a home can be overwhelming, particularly if it’s your first. This is why we’ve created a handy guide to support you along the way. It includes useful tips and ideas for each stage of the home buying process, from when you first decide to buy to receiving your new set of keys as a first home owner.

 

Discover The Home Buying Guide

Read more:

Sources:

  1. Liberal Party : Helping Australians Buy their Own Home
  2. NHFIC : First Home Loan Deposit Scheme
  3. ATO : First home super saver scheme
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Terms And Conditions

Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product.

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