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Buyers are being urged to get in quick for the second round of the First Home Loan Deposit Scheme, with banks expecting a rush of applications.
If you missed out the first time, the second round of the First Home Loan Deposit Scheme will kick off on 1 July with a further 10,000 spots up for grabs, but you'd better make sure you get your application in quickly.
Despite the economic uncertainty of the impact of COVID-19 on the property market, applications for the second round of the scheme are expected to be keenly sought.
The First Home Loan Deposit Scheme (FHLDS) is a government initiative designed to help eligible first home buyers secure their first home with a deposit as low as 5% by guaranteeing up to 15% of the value of the home, thus avoiding costly Lenders Mortgage Insurance (LMI).
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.
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. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 08 July 2020. View disclaimer.
The scheme's first 10,000 places, released on 1 January 2020, showed strong demand for the program particularly among first home buyers under the age of 30.
One of those buyers was 26-year-old Blaise Menzies-White who bought his first property in Victoria after securing a spot in the scheme through Bendigo Bank.
“That’s what made it possible for me to buy my first home - it was the difference between buying right now and waiting another couple of years to save the $20,000-$30,000 extra I would have needed to make the minimum deposit," he said.
Mr Menzies-White said the COVID-19 pandemic only strengthened his decision to purchase a bigger home.
“COVID-19 has been really stressful for so many people. I think people are going to want more space in everything, when they eat out, go out and perhaps also in how they live. Shoebox style apartments in cities may not be as popular that they once were for the fear of germs and catching disease.
“I’m very lucky that I have a property with a lot of space, that I was able to purchase before COVID-19, that I am still employed, and that my friends live with me to help pay the mortgage.”
According to the latest figures from the National Housing Finance and Investment Corporation (NHFIC) (the entity administering the scheme) 5,500 guarantees have been issued, with another 4,500 having reserved a guarantee and in the process of finding their first home.
With the second round of the scheme kicking off on 1 July, here are a few things buyers need to know before applying for the scheme.
Can you apply for the scheme if you haven't lodged your tax return?
If you want to apply for the scheme, you'll need to provide a Notice of Assessment from the Australian Taxation Office for the 2019-20 financial year.
This means you'll need to lodge your tax return ASAP if you want to apply for the scheme when it kicks off on 1 July.
Can you use the scheme in conjunction with the HomeBuilder grant?
Yes. The $25k HomeBuilder scheme can be used in conjunction with existing state and territory First Home Owner Grant programs, stamp duty concessions and other grant schemes, as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.
Essentially this means you could use the FHLDS to buy your first home, then take advantage of the $25k HomeBuilder grant to renovate it into your dream property.
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 2019. 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 2019) 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 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.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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