The Federal Government will extend the First Home Loan Deposit Scheme, adding an additional 10,000 places to stimulate the economy and support construction.
The First Home Loan Deposit Scheme allows first home buyers to enter the market sooner by purchasing with a deposit as little as 5% by guaranteeing up to 15% the value of the home, saving them from paying Lenders Mortgage Insurance (LMI).
The scheme, which has already helped close to 20,000 first home buyers, is currently limited to 10,000 places each financial year on a first in, best dressed basis.
But the Federal Government will now allow an additional 10,000 first home buyers to enter the scheme from October 6 until June 30, 2021.
But there's a catch - this time around, applicants will only be able to apply for the scheme on the condition they are purchasing new builds.
Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Treasurer Josh Frydenberg said this is to help support the residential construction industry.
"Helping another 10,000 first home buyers to buy a new home through our First Home Loan Deposit Scheme will help to support all our tradies right through the supply chain including painters, builders, plumbers and electricians," Frydenberg said.
"In addition to the Government’s HomeBuilder program, these measures will support residential construction activity and jobs across the industry at a time when the economy and the sector needs it most."
New property price caps will also apply under the extended scheme.
First home buyers will be able to purchase new homes worth up to $950,000 in Sydney, $850,000 in Melbourne, $650,000 in Brisbane, $550,000 in Perth, Adelaide, Hobart, Canberra and Darwin.
First home buyers must apply for the scheme through one of the 27 lenders taking part in the scheme to be eligible.
Housing Industry Association Managing Director, Graham Wolfe welcomed the news, saying the scheme has helped thousands of first home buyers realise their dream of home ownership sooner.
“The fact that demand from first home buyers is so great that the Government has decided to expand the Scheme, shows what HIA’s research has suggested all along – Australians still cling to the dream of home ownership and the security it brings," Wolfe said.
“The extra 10,000 places for new homes and apartments that the Government has put into this Scheme will ensure more first home buyers achieve their goal of owning a home sooner."
The announcement comes ahead of Tuesday's Federal Budget which is expected to show a deficit of over $200 billion.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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