The race is on: thousands rush to apply for first home loan scheme

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If you’re thinking of taking advantage of the new First Home Loan Deposit Scheme then you better act quick, as thousands of first home buyers have already applied for the 10,000 guarantees available.

Between January 1 and 10, more than 3,000 first home buyers applied for one of the 10,000 spots up for grabs this financial year.

It’s fair to assume that number will have risen since, as there are more than 100,000 first-home buyers in Australia yearly.

Under the new federal government scheme, first home buyers must find a home within 90 days of approval.

The Commonwealth Bank (CBA) and the National Australia Bank (NAB) have been allocated a total of 5,000 places this financial year.

Another 5,000 spots will be available with 25 smaller lenders from February 1.

After those spots have been filled, first home buyers will have to wait until the new financial year on July 1 when another 10,000 places will become available.

What exactly is the First Home Loan Deposit Scheme?

Ok, so usually first home buyers with a deposit of less than 20% pay Lenders Mortgage Insurance (LMI) when taking out a home loan.

But under the government scheme, first home buyers with only a 5% deposit could be eligible to purchase a property without having to pay for LMI – which could save them as much as $10,000.

Now, it’s important to note this is not a handout – it’s a government guarantee to help first home buyers break into the property market with a smaller deposit.

In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

More details on eligibility can be found on the scheme’s website here. You can also check out the property price caps here.

Want to find out more?

If you’re thinking about purchasing your first home soon and are considering applying for this scheme – give us a call today.

We’d love to run you through the scheme in more detail and, if you’re eligible, help you apply for it through one of the scheme’s participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

First come, first served: first home buyer scheme now open

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Applications for the new First Home Loan Deposit Scheme are now open, with 10,000 guarantees available to first home buyers looking to get a leg up into the property market.

Now, with 10,000 spots it might sound like you’ve got plenty of time up your sleeve to take advantage of the new scheme, but consider this: 110,000 Australians bought their first home in 2018.

So if you’re interested in applying for this scheme, you’ll want to put it at the top of your to-do list in 2020 and get in touch with us ASAP.

Back up a little. What’s this new scheme again?

Ok, so currently people with a deposit of less than 20% usually have to pay Lenders Mortgage Insurance (LMI).

But under the government scheme, first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.

Now, it’s important to note that this is not a handout – it’s simply a government guarantee.

But this guarantee can give first home buyers a “leg up”, says the federal government, as it could save you as much as $10,000 in LMI insurance.

Any more details?

The scheme commenced on 1 January 2020.

In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

More details on eligibility can be found here.

The property price caps

Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.

– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)

– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)

– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)

– WA: $400,000 (Perth) and $300,000 (rest of state)

– SA: $400,000 (Adelaide) and $250,000 (rest of state)

– TAS: $400,000 (Hobart) and $300,000 (rest of state)

– ACT: $500,000

– NT: $375,000

Get the ball rolling

If you’re considering purchasing your first home in 2020 but don’t have a 20% deposit saved up yet – get in touch.

We’d love to run you through this new scheme in more detail and, if you’re eligible, help you apply for finance with one of the scheme’s participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Could you flick Netflix? ASIC updates responsible lending guidance

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Could you say goodbye to Netflix to take out a loan? That’s one example corporate watchdog ASIC has included in its responsible lending update.

Now, rest assured that you don’t actually have to say goodbye to Netflix to take out a loan. It’s just a “non-essential” expenses example ASIC has provided in its updated Regulatory Guide 209 (RG 209) to provide greater clarity and support to lenders and brokers.

In one of the 39 guidance examples in the updated guide, a prospective borrower named Leah “advises her lender that she could cancel her monthly streaming services” to cover the monthly repayment of a proposed smaller loan.

Rough. We know. Apparently Leah didn’t even get to finish the latest season of The Crown.

But rest assured that if (unlike Leah) you can’t live without your fix of Netflix there’s scope for other non-essential expenses to be cut instead – if you need to make cuts at all (it depends on your financial situation).

“Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements,” ASIC explains in the principles-based guide which it says allows for “flexibility to determine what is appropriate in individual circumstances”.

ASIC has also included a section that confirms small business lending is not subject to responsible lending obligations, irrespective of the nature of the security used for the loan.

Anything else I need to know?

Absolutely. There’s an interesting section in the updated guidance where ASIC states:

“We recognise that a consumer may be able to reduce their spending and change their lifestyle in order to afford a particular loan and be able to do so without substantial hardship.”

And a related section that states: “There may be some lifestyle changes the consumer would not be prepared to make to afford credit.”

So come in for a chat. We can discuss with you what your essential expenses and your non-essential expenses are, and how they may impact your credit application.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Swipe right to buy your first home

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A new web platform described as a ‘dating app but for home-ownership’ says it can help users enter the property market in half the time it usually takes.

Mortgage Mates – the brainchild of Perth-based mates Daisy Ashworth and Jess Vesely – uses algorithms to match you with like-minded individuals who share similar housing preferences but also don’t yet have a big enough deposit to crack the property market.

Ways you can search for ‘mates’ include Australia-wide location options, housing choices (apartment, unit, house or land packages), price, age and gender.

Once connected and keen to buy, the duo say they can link you with legal services to help you safely and securely enter the property market.

The co-founders say that by matching up with another user who shares your housing aspirations you can have the security of home-ownership over renting or living in a share house.

The other major benefit of pooling your money with like-minded individuals is increasing your property options, the co-founders say.

Another way to crack the property market sooner

Another way to get into the property market in 2020 is through the federal government’s First Home Loan Deposit Scheme, with applications for the scheme opening on 1 January 2020.

Run by the National Housing Finance and Investment Corporation (NHFIC), the scheme this week launched an interactive online eligibility tool to assist first home buyers determine their potential eligibility (with property price caps further down the page).

Under the scheme, some first home buyers will be able to borrow up to 95% of the value of their property without forking out for Lenders Mortgage Insurance (LMI).

Last week it was announced that NAB is the first lender on the panel. The remainder of the panel will be announced in the coming weeks.

Get in touch

There’s one big catch when it comes to the First Home Loan Deposit Scheme – and it’s a bit of a doozy.

The scheme is limited to just 10,000 first home buyers loans each year on a ‘first come, first served’ basis.

When you consider that the number of Australians who bought their first home in 2018 totalled 110,000, if you are planning on using it in 2020, it’s best to get the ball rolling on it now.

So if you’re considering purchasing a property but don’t have a 20% deposit saved up yet – get in touch.

We’d love to run you through the scheme in more detail and help you plan ahead for the new year.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Caps for new first home buyer scheme revealed

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The property price caps in each state have been revealed for the federal government’s new first home buyer scheme. Read on to find out the maximum value of a property you can purchase under the scheme.

Imagine buying your first home with a 5% deposit and not having to pay lenders mortgage insurance (LMI).

Sounds good, right?

Well, the federal government has finally revealed more details in a draft mandate for the scheme, including the property price caps in each state.

The property price caps

Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.

– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)

– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)

– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)

– WA: $400,000 (Perth) and $300,000 (rest of state)

– SA: $400,000 (Adelaide) and $250,000 (rest of state)

– TAS: $400,000 (Hobart) and $300,000 (rest of state)

– ACT: $500,000

– NT: $375,000

Great, but what’s this scheme again?

Ok, so currently people with a deposit of less than 20% usually have to pay LMI.

But under the government scheme, eligible first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.

Now, it’s important to note that this is not a handout – it’s simply a government guarantee.

But this guarantee could be very helpful, as it could save you as much as $10,000 in insurance.

Any more details?

The scheme is due to commence on 1 January 2020.

In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

But here’s the catch: the offer is limited to just 10,000 first home buyer loans each year. That’s less than 10% of the 110,000 Australians who bought their first home in 2018.

So who gets first dibs?

That’s the million-dollar question! (or, depending on where you live, the $400,000 question).

It looks as though applications will be granted on a “first come, first served” basis.

So if you’re considering purchasing a property but don’t have a 20% deposit saved up yet – get in touch.

We’d love to run you through the scheme in more detail and help you plan ahead for the new year.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.