The 5% deposit scheme for first home buyers known as the First Home Loan Deposit Scheme passed legislation on 15 October 2019.
The National Housing and Investment Corporation (NHFIC) Amendment Bill 2019 was introduced to the House of Representatives on 12 September and the Senate on 18 September and was passed by both houses.
Under this new bill:
- 10,000 eligible first home buyers will be able to purchase a home with a 5 per cent deposit without having to pay Lenders Mortgage Insurance (LMI).
- The scheme will allow eligible first home buyers to save tens of thousands of dollars as they won’t have to pay LMI fees.
- A new research function will be established within NHFIC to investigate housing demand, supply and affordability, supported by $25 million in funding.
Which lenders are part of the scheme?
A panel of lenders will be chosen by the NHFIC, which will consist of smaller lenders and brokers – and they are the only ones eligible to offer the scheme.
Smaller lenders will be prioritised in order to boost competition in the mortgage industry. So, the scheme will likely not be available through the major banks or the big four of Australia.
When consultation regarding the scheme opened up to stakeholders, there was overwhelming support for it as lenders understood the hurdle for first home buyers to save a deposit.
Once the details regarding the application and approval process for the scheme are finalised, the lenders will incorporate it into their onboarding process.
Mortgage brokers like us can help the first home buyer compare home loans with a range of lenders that offer the 5 per cent deposit scheme and choose a lender that best suits your situation.
Should I wait for the scheme to roll out?
The First Home Loan Deposit scheme will only commence from 1 January 2020.
However, if you already have a property you want to buy right now, there are other no deposit home loan options available:
- Go for a guarantor loan and get your LMI waived.
- You can still get a 95% home loan with the LMI capitalized.
- We even have a lender on our panel offering 100% home loan with no LMI for eligible professionals.
Furthermore, following the third rate cut by RBA this year, mortgage interest rates are at record lows.
Are you a first home buyer looking to buy your first home
Call us on 1300 889 743 or fill in our free assessment form and we’ll guide you through the process of buying your first home.