The Australian government has made sure that its citizens have decent housing they can call their own-with no fuss to it. Thanks to The New Home Guarantee and First Home Loan Deposit Scheme (FHLDS). This aims to allow first homeowners a home to their name with no fuss, including a low down payment. More Australians can now get the chance to have a new home without having to exhaust their bank accounts.
According to a report from the NHFIC, over 6,000 workers were supported by the FHLDS in buying their first home. Separately, another 6,000 homes were also built under the same scheme, while in 2021, a total of 23,000 homes have been bought all across Australia using the FHLDS.
In most cases, buyers who have less than a 20% deposit need to pay lenders insurance, however, under the FHLDS eligible first home buyers can buy a modest home with a 5% deposit (lenders standards apply). NHFIC guarantees the lender up to 15% of the price of the property value financed by using an eligible first home buyer’s home loan. The guarantee remains the same until the loan is refinanced, sold, or if you move out or if and when your loan principal balance reduces to below 80% value of your property at purchase.
A guarantee is given by the Australian Government on eligible loans provided by participating lenders to an eligible buyer/borrower. The difference between the first home buyer’s deposit ( at least 5%) and 20% of the value of the eligible property is considered as the guaranteed amount. This is the same with the parental or family guarantees, but in this case, the NHFIC is the guarantor. The FHLDS guarantees 10,000 loans per financial year, so there’s lots of room for you.
As long as you’re an eligible first home buyer, you can apply for an eligible loan for a property through lenders who are a part of the scheme/program. Those who are also borrowers can also use the guarantee together with other Australian government programs like the First Home Super Saver Scheme.
Here are some situations where the FHLDS could be ideal for you
Do you belong to this group but you’re looking to stop renting? While renting a home nowadays seems practical, think of all that money down the drain not going anywhere. Think about it; For monthly rent in Sydney, you pay an average of about $550 per week at a minimum. Won’t it make sense to direct that payment for a mortgage instead of rent? When you rent, the money goes nowhere, and your landlord might even consider increasing the rent. What if you direct that amount or maybe even less to the First Home Loan Deposit Scheme? After some time and simple paperwork, move in and continue paying the mortgage. The difference? You own the home. It’s in your name. Easy.
Young and Free
Recently, more and more young Australians have taken the leap of being independent and financially free. Using the FHLDS, young Aussies can use this to their advantage as the loans under FHLDS require scheduled repayments of the principal and interest of the loan for the full period of the agreement, which will need to be for a term of 30 years or less. When you start paying a mortgage at a young age, the sooner in life will you complete full payment, which means the earlier you take one huge burden off your finances.
Regional and suburban living
The FHLDS applies to all eligible buyers, eligible properties, and the entire country. Recently, a lot of Australians have moved to regional and suburban areas especially when the pandemic has begun. Not only is the cost of living much lower, but it also provides a safer living environment as it is not crowded and heavily populated. Through the NHFIC, the FHLDS scheme has assisted a total of 37% of regional home purchases throughout 2021. This means that if you are considering living outside the key cities of Australia, as long as the property is termed as “eligible” by the FHLDS, then you can, by all means, use the scheme for your first home.
Are all properties eligible for this scheme?
The short answer to this is no. However, the property must be considered a residential property.
• A house AND land (as one or package)
• A house, apartment, or townhouse building
• Separate contracts for land and building a house
There are many things you can invest in, but buying a property is considered one of the best investments to make, especially for young people.Make that decision to purchase a property today! Visit our website or talk to us. We’d be happy to hear from you.