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.