How do I qualify for the first home loan deposit scheme?

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Jorah
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Joined: Tue Jun 18, 2019 6:06 pm

How do I qualify for the first home loan deposit scheme?

Postby Jorah » Tue Jun 18, 2019 6:08 pm

Hi, we’ve been saving for a deposit for a couple of years now. We’re looking to purchase somewhere in Waitara, NSW where the median price was $665,000 last year. We are both first home buyers with about $70k in savings which is roughly 10%. We understand we may have to pay LMI but I recently read that the government announced a first home buyer’s scheme wherein first home buyers pay no LMI. How does the government's new deposit scheme work? And how do we qualify?

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Otto Dargan
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Re: How do I qualify for the first home loan deposit scheme?

Postby Otto Dargan » Tue Jun 18, 2019 6:12 pm

Hello Jorah. Welcome to the forums.

The first home loan deposit scheme allows first home buyers with alow deposit to buy a house without paying tens of thousands in lenders mortgage insurance (LMI).
If you qualify for the scheme, when purchasing a $665,000 house with a 10% deposit, you’re looking at saving anywhere between $10,127-$14,903 in LMI fees depending on the lender’s mortgage insurer.

To qualify for the first home loan deposit scheme, first home buyers:
  • Must have a minimum of 5% of the purchase price as the deposit.
  • Must not be earning more than $125,000 p.a for singles and $200,000 for couples.
  • The value of the home you can purchase under the scheme will be determined by the regional property market prices likely similar to the first home owners grant (FHOG) property price criteria.

Please note that this scheme will only be available to $10,000 borrowers a year which is only 10% of the total first home buyers from 2018. The scheme will come into effect from January 2020 and all the full details have not yet been released.

We specialise in low deposit home loans.

Speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or by filling in our free assessment form to find out if you qualify for a home loan with a low deposit.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Jorah
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Joined: Tue Jun 18, 2019 6:06 pm

Re: How do I qualify for the first home loan deposit scheme?

Postby Jorah » Tue Jun 18, 2019 6:38 pm

So let me get this clear, currently, if I were to apply for a home loan, do I have to come up with the LMI as well as the deposit? Can’t I add the LMI fee on to my home loan amount?

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Otto Dargan
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Re: How do I qualify for the first home loan deposit scheme?

Postby Otto Dargan » Tue Jun 18, 2019 7:05 pm

Hi Jorah,

Typically, for first home buyers with low deposits, some of our lenders allow you to borrow up to 95% plus the cost of LMI. So yes, you can add the LMI on top of your home loan (capitalise) with some lenders however, stricter lending criteria apply. Not many lenders allow you to capitalise the LMI with a 95% home loan. Applying with the right lender is key.

You can use our LMI calculator to work out the cheapest LMI from our panel of lenders.
Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Jorah
Posts: 3
Joined: Tue Jun 18, 2019 6:06 pm

Re: How do I qualify for the first home loan deposit scheme?

Postby Jorah » Tue Jun 18, 2019 7:24 pm

Yes, that’s my understanding as well. One final thing can you explain to me how does the new scheme actually work? I mean how much is the government actually guaranteeing and when does it expire?

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Otto Dargan
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Re: How do I qualify for the first home loan deposit scheme?

Postby Otto Dargan » Tue Jun 18, 2019 7:34 pm

Hi Jorah,

As you may be aware, generally when you’re borrowing over 80% of the property value, the banks insure your home loan with a lenders mortgage insurer. The lenders' mortgage insurance (LMI) fee which can often be in the tens of thousands of dollars is then passed on to you as the borrower. With this scheme, the government will basically guarantee any shortfall on your deposit up to 15% acting as your mortgage insurer so you can avoid the LMI cost. The maximum the government will guarantee will be 15% so that means you’ll need at least a 5% deposit to meet the 20% deposit required to avoid LMI. The guarantee expires once the loan to value ratio (LVR) reaches below 80% of the property value.


Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a low deposit home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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