The very popular First Home Loan Deposit Scheme is back again with first home buyers once again set to benefit.
The latest Federal Budget has put a clear focus on helping first home buyers get into a new home and as a result, the FHLDS has been extended and expanded.
However, there are some key changes that will impact first home buyers.
What is the First Home Loan Deposit Scheme?
The First Home Loan Deposit Scheme is a program that allows first home buyers to purchase a property with as little as a 5 per cent deposit without being forced to pay lenders mortgage insurance (LMI).
In many cases, LMI can cost a homebuyer upward of $10,000 and can significantly hurt the chances of a first home buyer getting into a new home. Under the program, the Federal Government effectively guarantees the difference between what the first home buyer has saved and the 20 per cent deposit that most lenders require, which helps in reducing the LMI burden.
The Government only makes 10,000 places available, so it is important to act quickly if you’re interested in taking up the scheme
Changes to the First Home Loan Deposit Scheme
The most notable change has been the focus put on buying a new or a newly built home.
The program has also been expanded with the thresholds increased across the country, meaning there will be more homes that will be available for first home buyers to purchase with the help of the scheme.
| State | Capital city/regional centre – new cap | Capital city/regional centre – previous cap | Rest of state – new cap | Rest of state – previous cap |
| NSW | $950,000 | $700,000 | $600,000 | $450,000 |
| VIC | $850,000 | $600,000 | $550,000 | $375,000 |
| QLD | $650,000 | $475,000 | $500,000 | $400,000 |
| WA | $550,000 | $400,000 | $400,000 | $300,000 |
| SA | $550,000 | $400,000 | $400,000 | $250,000 |
| TAS | $550,000 | $400,000 | $400,000 | $300,000 |
| ACT | $600,000 | $500,000 | N/A | N/A |
| NT | $550,000 | $375,000 | N/A | N/A |
Some of the largest increases have come in both Sydney and Melbourne, where house prices are generally higher. Both states have increased their caps by $250,000 to $950,000 and $800,000 respectively. While the other states and regional areas have increased the threshold by between $100,000 and $150,000.
Round three of the FHLDS began on Tuesday (October 6) and places with the 27 lenders are limited to 10,000.
The starting point to access the program is to speak with a mortgage broker to find out if you qualify and meet the list of eligibility criteria.
It’s also important to note that you must also be able to qualify for finance based on normal serviceability requirements.
The other advantage of the FHLDS is that it is able to be used in conjunction with other state and federal incentives including the FHOG and various state building grants. However, it is worth noting that the cut-off period for these building grants is fast approaching and building contracts need to be signed prior to the end of the year depending on your state.
General advice disclaimer
The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
Only financial planning advice provided by CeebeksTM Financial Solutions is associated with Avana Financial Solutions.
Christopher Beks (Authorised Representative no. 231937) is a director of CeebeksTM Financial Solutions (Authorised Representative no. 344518) and an Authorised Representative of Avana Financial Solutions Pty Ltd AFSL 516325 and is authorised to provide personal financial advice.
