A Quick Overview
|Customer Goal||To buy his first home under the First Home Loan Deposit Scheme (FHLDS).|
|Problem||There were no slots available for the scheme.|
|LVR and Term||93.54% LVR (loan to value ratio), 30-years loan term|
|Solution||Sent in a strong application on getting notified about the cancelled spots.|
Shooting his shot
A young lad in his early thirties, John, was already witnessing a transcending growth in his career.
On completing his first year as the territory manager for a reputable company, he grew the confidence to get a mortgage for his first home.
He had his eyes on a property worth $650,000 for the longest time.
Once he made up his mind to get a home loan, he promptly signed the contract of sale.
Although John earned an annual gross income of $107,497, he did not have a large deposit for his first home.
He had read in a forum about the first home loan deposit scheme (FHLDS). Through this grant, he could pay a low deposit of 5% and skip paying the LMI (Lender Mortgage Insurance) fees.
It turned out just so that this grant was just what he needed.
The factors which made John eligible to apply for this grant were that he:
- Was a first home buyer
- Was an Australian citizen over 18 years of age, holding a medicare card
- Earned an income of $107,497 as a single first home buyer (lower than the accepted maximum of $125000 p.a.)
- Could afford the required minimum deposit of 5%
- Agreed to move into and live in the property as his principal place of residence
- Was OK with making scheduled payments of the principal loan amount
All he had to do now was, find a lender registered for the scheme and apply with them.
All slots for FHLDS booked!
When John went in to apply for the FHLDS, only a few lenders had registered.
Among them, only one major lender had completed updating their system to align with the scheme. So, only they were registering slots.
When the scheme was first announced, there were only 10,000 spots available and a major lender could only accept 5,000 spots.
Unfortunately, all the slots were full for the major lender; hence, John could not apply.
The dream that John had of owning his own home became a hazy blur.
He could not align his senses to think on how else he could get his dream home with a low deposit and not having to pay for LMI.
To gain some perspective, he half-heartedly approached a friend who had recently gotten a home loan.
Finding the solution
John’s friend referred Home Loan Experts to him, the same mortgage broking company that he went through for his loan.
John contacted us for help, and we linked him up with one of our senior brokers, Mohit Lal Pradhan, who has built an excellent reputation in the mortgage industry.
Competing for a spot
Mohit directly liaised with the business development manager (BDM) of the same lender whose slots were full.
The BDM informed Mohit that a lot of applicants were cancelling their spots.
On reviewing John’s eligibility and on Mohit’s request, the BDM also verified that he would consider his application soon as a spot was empty.
A spot was empty within the same week. Mohit submitted an errorless application, and they received an approval almost immediately.
Proving a high borrowing capacity
Even though John got the grant under the First Home Loan Deposit Scheme, he still had to comply with the lender’s specific criteria.One such criterion was checking his borrowing capacity.
John’s borrowing capacity on his current liabilities would service low according to the lender’s calculator.
Therefore, Mohit applied the following solutions to increase his borrowing capacity:
- Got him to close his Volkswagen facility to decrease his liabilities.
- Did not factor-in his AMEX credit card bill to increase the serviceability of his loan. They presented the lender with the corporate credit card statement as proof that it is not a personal liability.
- Got him to close his Bankwest credit card to cut down his expenses.
Cutting down on his expenses and liabilities to comply with the lender’s parameters worked in his favour. His loan serviced well for the lender to approve his loan.
Once John got his loan formally approved, he got to the settlement for his home loan in no time!
A happy ending
John was over the moon to buy his first home through the First Home Loan Deposit Scheme.
He paid a low deposit of 5% and paid no LMI fees, which saved him thousands of dollars.
The cherry on top was Mohit even negotiated a discounted interest rate on his home loan!
Also, since he had fewer liabilities, he could easily repay his home loan over the course of 30 years with ease!
A big win for John at last!
Are you a first home buyer?
If you are looking to get a home loan for your first home, please contact us!
The First Home Loan Deposit Scheme has been extended to 31 June 2021 so now you can also apply for the FHLDS for new homes.
Our specialist mortgage brokers are well aware of all the schemes available and are experts in the procedures involved.