New First Home Loan Deposit Scheme places open today

The First Home Loan Deposit Scheme, which lets first home buyers buy a home with just a 5% deposit, is restarting today (1st July 2020).

The first 10,000 spots rolled out in the first half of the year were filled and a majority were taken out by singles (58%). The average income of successful single applicants was $66,500 while couples had a combined income of $109,400. In the first tranche, there was a mix between the number of applicants buying in the state’s capital cities and outer regions, although there was a noticeable interest in regional areas. The average deposit size saved was roughly 7%.

Bendigo Bank’s executive of consumer banking Richard Fennell urged borrowers to act quickly to avoid missing out: “Make sure you have your income information ready to provide to the bank to prove your eligibility and also to have a minimum of a five per cent deposit saved up,” he said. “Also have [an] idea of what sort of property you want to apply for because there are maximum values that you can buy using the scheme.”

Under the scheme singles must have a taxable income in the 2019/20 financial year less than $125,000, while couples must not earn more than $200,000.

Successful applicants only need a minimum five% deposit saved up — the government acts as a guarantor for the remaining 15%. This means the purchasers avoid the hefty lenders’ mortgage insurance – a cost that protects the lender, not the borrower if there is a default on the loan.

Applicants need to provide a copy of the notice of assessment from the ATO to their bank from the 19/20 financial year, but while waiting for this they can register their interest in the scheme with banks offering these loans.

The National Housing Finance and Investment Corporation’s chief executive officer Nathan Dal Bon, CEO said despite COVID-19 “we anticipate that there will be continued demand for these new 10,000 places.”

“We encourage potential first homebuyers interested in the Scheme to contact participating lenders and have their financial paperwork ready,” he said.

The Federal Housing Minister and Assistant Treasurer Michael Sukkar said the scheme had been “incredibly successful” in its first year.

He expects to be strong demand in the second round of spots which are available by 27 lenders including two of the big four banks – the Commonwealth Bank and National Australia Bank.

If you want to learn more about the First Home Loan Deposit scheme, click the link below.

Written: 1 July 2020, Updated: 23 July 2020

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