The tricks to buying your first home sooner using the First Home Loan Deposit Scheme
First home buyers are being urged to act quickly in order to snap up a place in the Federal Government’s First Home Loan Deposit Scheme. This is what you need to know.
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Hopeful first home buyers need to act fast to secure a spot in the extended First Home Loan Deposit Scheme.
In this month’s Federal Budget Treasurer Josh Frydenberg unveiled a third tranche of the popular scheme which has made another 10,000 spots available to entry-level buyers who want to purchase a newly-built or new home. We asked the experts for their advice on five fast ways to buy your first home.
1. APPLY SOON
Experts have warned they are likely to be snapped up fast given the success of the first two tranches rolled out this year. Under the program, borrowers only have to save a five per cent deposit and they avoid paying the expensive lenders’ mortgage insurance, so experts say apply as soon as possible.
2. GET THAT DEPOSIT SAVED
Plant operator Jamie Stock, 22, saved up $40,000 and recently bought his first home at Clyde in Melbourne’s southeast. After saving hard for about 12 months, Scott says he paid $505,000 for the four-bedroom newly-built home.
“I started saving seriously about a year ago because I had a goal in mind I wanted to get my first house,” he says. “I only needed five per cent saved so I only had to put down $25,000. It would have taken me probably another year to save if the scheme wasn’t available – people should keep saving as much as they can.”
3. UNDERSTAND PRICE CAPS
Under the latest tranche, the property price caps have been increased.
In Sydney the new cap is $950,000, while in Melbourne it’s $850,000, in Brisbane $650,000, and $550,000 in all other capital cities.
Aussie Home Loans chief executive officer James Symond says there’s “more opportunity for first home buyers than there has been for some time”.
“I suggest applicants act now as the window of opportunity will close quickly, following the success of the first two allocations under the scheme,” he says. “The key is to get a mortgage broker to provide guidance with both eligibility for the scheme and the application itself.”
4. SORT YOUR PAPERWORK
Bendigo and Adelaide Bank’s executive of consumer banking Richard Fennell says the extension of the scheme was a fantastic opportunity for home buyers.
“We would be encouraging first home buyers to get in touch with one of the lenders who is an approved provider of the scheme,” he says.
“They should have a discussion to find out the process they need to go through to reserve a spot and be ready to go. They don’t need to be ready to purchase the property straight away but they do need to get an application in time in case all the places run out within months.”
Fennell says potential buyers should compile all their paperwork including pay slips and bank statements before contacting a lender.
5. GET PRE-APPROVAL SORTED
Symond says loan pre-approval is an excellent way to guide hopeful borrowers on how much they can borrow with a five per cent deposit.
“Information is power,” he says.
“People need to be ready so they can put in the right offer.”
Pre-approval usually lasts 90 days.
FIRST HOME LOAN DEPOSIT SCHEME
• 10,000 new spots are available for newly built or new homes.
• Only a five per cent deposit is required.
• The Federal Government guarantees the remaining 15 per cent deposit.
• Borrowers avoid paying hefty lenders’ mortgage insurance.
• Financial institutions involved in the scheme include the Commonwealth Bank, National Australia Bank and 25 smaller lenders.
• To apply contact a participating lender or a mortgage broker.
• The scheme ends on June 30, 2021.