The First Home Loan Deposit Scheme (FHLDS) has officially kicked off, with the start date being 1 January 2020 for the major lenders, which are National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA), and 1 Feb 2020 for 25 other non-major lenders. The key driver behind the scheme is to allow young Australians and other first home buyers to get into their first home sooner than they would otherwise be able to. The Scheme will allow those first home buyers that are low and middle income earners to get into their first home with as little as 5% deposit, with the Australian Government providing a guarantee to the lender.
The FHLDS will be available to up to 10,000 eligible first home buyers each financial year, and can also be used in conjunction with other first home buyer benefits such as the First Home Super Saver Scheme and First Home Buyer grants and concessions that could be available to you in your state. This could be a great opportunity for many first home buyers, however it’s important to recognise that there is a set of eligibility criteria that will need to be met, there are price caps in the various states and not all postcodes will be eligible.
This week we’re unpacking the FHLDS for first home buyers across the country, including those Australian expats who may be considering a return home to Australia, to remove the confusion and outline exactly what you need to know about the scheme.
Let’s start with the eligibility criteria
To be eligible for the FHLDS, there are a number of criteria that must be met, which we’ve outlined below:
- You must be aged over 18
- You must be an Australian citizen, which also excludes Australian Permanent Residents (PR)
- You must now have owned a property in Australia previously under the Ownership Test, which includes any of the following:
- a freehold interest in real property in Australia
- an interest in a lease of land in Australia with a term of 50 years (or more), or
- a company title interest in land in Australia.
- Your annual income must be below the thresholds below depending on whether you’re applying as a single individual or as a couple:
- Single: $125,000
- Couple: $200,000 combined
- Do not that you won’t be eligible for the scheme if you’re looking to buy with a friend or other relative. It must be your defacto partner or husband or wife.
- You must have a deposit saved of between 5 – 20% of the property’s value
- You must plan to live in the property, i.e. it can’t be an investment property
- You must make scheduled repayments to the principal throughout the life of the agreement as part of the FHLDS.
Next, let’s explore which properties are eligible for the scheme
The majority of property types are eligible for the scheme, including houses, apartments, townhouses or even house and land packages to build your own home. There are various price caps in each of the states and territories that you must be aware of. We’ve outlined each of these below for your reference:
Which lenders are participating in the Scheme?
There are a wide range of lenders participating in the Scheme, including both Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) as the two major lenders, and a further 25 non-major lenders, which are outlined at this link. All lenders who are part of the Scheme will not be charging higher interest rates, which could apply to those outside of the Scheme seeking to borrow up to 95% of the property’s value, which is great news for eligible first home buyers.
How can a Loansuite broker assist you?
We can take you through the entire process from ensuring that you’re eligible, that your property meets the relevant criteria and help you to apple for the First Home Loan Deposit Scheme (FHLDS) to ensure that you can get into your own home faster. Reach out to our team today to book your complimentary consultation to explore your options.
LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.
Book an obligation-free, complimentary consultation here today.
LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.