First Home Owners Deposit Scheme Key Points
1 January 2020
Singles earning below $125,000 couples earning below $200,000
Property Price Caps NSW:
Capital City’s and regional centres ($700,000) rest of the state ($450,000)
Goulburn’s anticipated threshold is $450,000.
You can search your postcodes threshold by going to; http://www.nhfic.gov.au/what-we-do/fhlds/eligibility/
What does the First Home Owners Deposit Scheme allow me to do?
Before 1 January 2020 home buyers that had deposits less than 20% of the total sale price had to pay an additional fee called “Lenders Mortgage Insurance”. Under this new initiative instead of a third party company underwriting the loan for First Home Buyers, the Government will now do this on their behalf, subject to eligibility of the applicant.
How does it work?
The scheme is designed to make it easier to secure your first home loan, without having to save a full 20% deposit or go through the application and expense of Lenders Mortgage Insurance. You will still need to complete the rigorous checks by your lender for your loan and then you will also need to apply to National Housing Finance and Investment Corporation (NHFIC) to demonstrate that you meet their criteria. Applications will have to be made via a participating lender. The Government essentially acts as a guarantor on your loan meaning the bank does not have to take out insurance on the loan. Whilst you are enrolled in the scheme you will receive ongoing support and help. However if you decide to refinance you will be automatically de-enrolled from the scheme. If you still owe more than 80% on your loan you may have to pay LMI with the new financier.
What’s the catch? (Risks)
1. Your mortgage repayments could be larger because you’re paying back a larger sum
2. Your mortgage term could be longer
3. More interest could be payable over the life of the loan
4. The Government will only support 10,000 First Home Buyers per year on a national level
5. Entry level properties will be supported
6. Only certain Banks/Lenders will be on the Lender Panel for this Scheme
What’s the benefits? (Pro’s)
1. The Scheme enables first home buyers to get their foot on the property ladder sooner without worrying about the additional cost of Lenders Mortgage Insurance
2. First home buyers can use this alongside the First Home Owners Super Saver Scheme to withdraw voluntary super contributions that they have made up to the value of $15,000 per financial year. (withdrawal limits apply)
You can find out additional information on the Scheme by visiting the National Housing Finance & Investment Corporations website; http://www.nhfic.gov.au/media/1169/fact-sheet-first-home-loan-deposit-scheme-261119.pdf
- National Housing Finance & Investment Corporation
- Liberal Government Website
- Real Estate Business online
- Mortgage Choice