Calculate Your Eligibility Criteria for Federal Home Loan Deposit Scheme

January 14, 2021 By: Nfinity Financials0 comments

As a First Home Buyer, you could benefit greatly from the various federal and state government grants and schemes. One such scheme by the federal government is the Federal Home Loan Deposit Scheme.

FHLDS

With an intention of boosting the overall economy in general and the real estate market in particular, the federal government has launched a scheme under which eligible first buyers can get a home loan without paying money for Lenders Mortgage Insurance (LMI). Under this scheme, the government will act as the mortgage insurer thereby guaranteeing home loans for eligible First home buyers. This can help one avoid LMI by paying up to 5% of the property value as a deposit. This is because the government is guaranteeing the difference amount (less than 20%). First home buyers, therefore, can save anywhere between A$10000 to A$30000 in LMI fees based on maximum regional price cap as part of this scheme. The additional advantage that one gets is that Eligible First Home Buyers will also be able to leverage other government schemes and grants such as the First Home Owners Grant, First Home Super Saver Scheme and stamp duty concessions.

This scheme was started by the government on 1st January 2020 with 10,000 scheme places, and an additional 10,000 places have been made available from 1st July 2020 for the financial year of 2020-2021. Since, there are limited slots and a higher number of First Home Buyers it is believed that only one in ten First Home Buyers will be able to utilise the scheme. Thus, it would be prudent for all interested first home buyers to apply for the scheme at the earliest.

What kind of property can you buy?

The Federal Home Loan Deposit Scheme is primarily aimed at helping first home buyers from low and middle income groups purchase their dream property. The Cap on the property price varies from region to region based on the prevailing market prices. Under this scheme, you could purchase vacant land with a contract to build a house, an existing apartment or house or a home and land package.

Eligibility criteria for the home loan deposit scheme

The home loan deposit scheme has several requirements. Such as:

• Investment Status – One needs to be first home buyers.
• Deposit – Most lenders require a minimum of 5% deposit to be made where the funds are by way of genuine savings.
• Citizenship – This scheme is open only to Australian citizens above 18 years of age holding a medicare card. Please note: Permanent residents from other countries are not eligible for this scheme.
• Income Criteria – First home buyers (Single) earning up to $125,000 p.a or First home buyers (Couples) earning up to $200,000 p.a will be eligible. In case of couples only married or long time partners would be eligible. Parents or Siblings cannot apply joint ownership along with you under this scheme. You may also want to know that the Income Tax paid from the previous financial year will also be assessed.
• Terms of Payment – Home loans availed under this scheme require that full repayments i.e., principal plus interest be made for the full term period of the mortgage. Respite in terms of Interest-only repayments is only given for a specific period and for loans relating to purchase of vacant land along with a construction agreement.
• Residential Status – The applicants of this scheme must be owner occupiers of the property. Investors cannot take advantage of this scheme.

Mortgage brokers at Nfinity Financials can help you in applying for this scheme and to leverage other government schemes and grants as applicable.