The Australian government has launched a scheme called the First Home Loan Deposit Scheme (FHLDS) to support first time home buyers. Under this scheme eligible first buyers can get a home loan without paying for Lenders Mortgage Insurance (LMI). The government will act as the mortgage insurer thereby guaranteeing home loans for eligible First home buyers so you can avoid LMI by paying up to 5% of the property value as deposit. This is because the government is guaranteeing the difference amount (less than 20%). Thus, First home buyers 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 be able to leverage other government schemes and grants such as the First Home Owners Grant, First Home loan 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.
The FHLDS was a fabulous scheme but only 1 in 10 Australians would actually get the chance to avail the same given the demand against slot supply. However, in news that will make First Home loan Buyers happy, the Federal Government added another 10,000 new places under FHLDS and it’s being called the FHLDS: New Home Guarantee (NHG). Just like FHLDS, this scheme is for the first home buyers buying new homes or building new homes. The Govt has also increased the price threshold for new homes in all regions.
The way this scheme works is that the government has tied up with 27 participating lenders, and is only accepting applications through them. Out of these two major participating lenders have started accepting new requests from eligible first home buyers to join FHLDS – New Home Guarantee waitlist.
The government amended the scheme, such that home buyers wishing to avail FHLDS need to provide their Notice of Assessment from the ATO, effective from 1 July 2020. If you are quick to file your tax return with the ATO, then you can jump ahead in the queue and secure one of the elusive spots. You could easily do that, since most people don’t file their tax returns before 31st October 2020 and the date of filing could be extended up to
15th May 2021.
Prior to this announcement, most participating lenders had stopped accepting new applications as most places had been filled up very early on. Similarly, the expectation is that these additional scheme places will be filled up very soon as well.
Despite the new slots, there is still great demand against the supply and therefore the slots are still limited as compared to the number of First Home Buyers. Thus, it would be prudent for all interested first home buyers to apply for the scheme at the earliest.