What is the First Home Loan Deposit Scheme and how does it benefit first home buyers?

Any general questions you might have in regards to loans and finance.
James H
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What is the First Home Loan Deposit Scheme and how does it benefit first home buyers?

Postby James H » Tue Sep 17, 2019 7:04 pm

With the recent news of the First Home Loan Deposit Scheme offered by the government, I think this might be a good time for me to get into the property market. What is the scheme and how does it benefit first home buyers?

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Otto Dargan
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Re: What is the First Home Loan Deposit Scheme and how does it benefit first home buyers?

Postby Otto Dargan » Tue Sep 17, 2019 7:22 pm

Hello James. Welcome to the forums.

The First Home Loan Deposit Scheme is an initiative offered by the government to get first home buyers into the property market sooner, even with a smaller deposit.

Under the scheme, you would only need to save a 5% deposit of the property value without having to pay Lenders Mortgage Insurance (LMI), which could be a hefty fee levied for loans that are above 80% loan to value ratio.

For instance, if you are buying a property worth $650,000 and you only have $50,000 saved up, you could end up paying over $16,000 in LMI premium. So under this scheme, you would not have to pay this premium, even with a 5% deposit.

So, you would essentially be borrowing 95% of the property value without having to pay LMI.

The First Home Loan Deposit Scheme benefits first home buyers in the following ways:
  • First home buyers will be getting into the property market sooner, even with a smaller deposit.
  • You would save thousands of dollars without having to pay LMI.
  • Your savings would be used towards mortgage repayments rather than paying rent.
  • The First Home Loan Deposit Scheme can be used in tandem with other government concessions like the First Home Owners Grant (FHOG) and First Home Super Saver Scheme.
Please note that the First Home Loan Deposit Scheme will only come into effect from January 2020.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan even with a low deposit.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

James H
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Joined: Tue Sep 17, 2019 7:03 pm

Re: What is the First Home Loan Deposit Scheme and how does it benefit first home buyers?

Postby James H » Tue Sep 17, 2019 7:38 pm

Alright, thanks for the information. What is the qualification criteria for the First Home Loan Deposit Scheme?

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Otto Dargan
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Re: What is the First Home Loan Deposit Scheme and how does it benefit first home buyers?

Postby Otto Dargan » Tue Sep 17, 2019 7:46 pm

Hi James,

While information regarding the eligibility and qualification of the scheme has not been fully-fledged out at the time of writing this, it has been confirmed that:
  • The First Home Loan Deposit Scheme will only be available to 10,000 first home buyers in a year.
  • It will be given out on a first-come, first-serve basis.
  • If you’re a single home buyer, you have to be earning $125,000 p.a and for couples, it is $200,000 p.a.
  • The value of homes that can be purchased under the scheme will be determined on a regional basis, reflecting the different property markets.
The First Home Loan Deposit Scheme is based under New Zealand’s Welcome Home Loan. Please note that the scheme is not available for investment properties.

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

James H
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Joined: Tue Sep 17, 2019 7:03 pm

Re: What is the First Home Loan Deposit Scheme and how does it benefit first home buyers?

Postby James H » Tue Sep 17, 2019 7:58 pm

I will be waiting for more information to be updated. In the meantime, are there ways I can show that I am a good borrower to the banks or lenders so my chances of home loan approval are higher?

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Otto Dargan
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Re: What is the First Home Loan Deposit Scheme and how does it benefit first home buyers?

Postby Otto Dargan » Tue Sep 17, 2019 8:13 pm

Hi James,

You can keep updated on our page on First Home Loan Deposit Scheme which will be updated with the latest information as it comes.

Yes, there are ways you can increase your chances of loan approval which constitutes the normal bank lending criteria:
  • Be employed in the current job for more than 6 months.
  • Show that you have good credit history by paying off any outstanding debts before applying for a home loan.
  • Lenders like to see that you have genuine savings saved up, so if possible, set up a separate account and make regular contributions to the account.
  • There are restrictions on the property you can buy. You are likely to get approved if you're buying a property in a prime location or a unit with over 50m2 internal area.
  • Your asset position should match your age and income.
  • Make sure you are making regular repayments on any personal loans or credit cards that you have taken out. Even making timely payments on your rent is one of the indicators that you are a good borrower.
You can even use our borrowing power calculator that takes your income and expenditure figures to give you an accurate indication of how much you can afford to borrow.

You do not have to wait for the scheme to come into effect to buy your first home. Speak with our specialist mortgage brokers and we can provide you with the best options for your home loan.

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

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


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