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First Home Loan Deposit Scheme (FHLDS) – What You Need To Know

With significant speculation and what seems to be a fairly rushed government implemented scheme, the basis surrounding the First Home Loan Deposit Scheme (FHLDS) seems quite positive for first home buyers who have been struggling to save enough up to buy their first home.

What is the scheme exactly? The FHLDS is a guarantee by the government that will allow eligible first home buyers on low and middle incomes to purchase their first home with a deposit of as little as 5%.

Eligibility is strict, places are limited and by all accounts the application process will operate on a “first-in, best-dressed” basis, so if by doing your own bed time reading you don’t feel comfortable that you fully understand the process; I strongly recommend reaching out to a lending specialist who can help. 

Unlike the First Home Owners Grant [VIC] which is eligible to anyone who meets the criteria. The First Home Loan Deposit Scheme is only available to 10,000 applicants per financial year nationally. (& to put that in perspective.. current data suggests that we have seen an average of 100,000 first home buyers purchasing per year – so quick maths suggests only 1 in 10 will gain access to this lucrative offering).

Furthermore, it is not quite as simple as just applying to any bank/lender… most of your mainstream banks are not included in the scheme. Please see the following link for details on all 27 lenders on the panel

Can you apply for both the FHLDS and the First Home Owners Grant? The answer is yes. They are separately run across Federal and State government and hence are managed independently. So for potential first home buyers in 2020, the most ideal scenario for you could be that you get your Stamp Duty waived in full (if you are to purchase a property in VIC for under $600,000), you gain access to the First Home Owners Grant of $20,000 (if you purchase in regional VIC) & can have your lenders mortgage insurance covered under the new FHLDS whereby only needing a 5% deposit.

Given the hot topic of first home buyers, I use this opportunity to reflect on some of the facts that first home buyers have had and do have in Victoria:

  • If you purchase your first home (to live in) under $600,000 you will be exempt from paying Stamp Duty. Equally should you purchase a property worth $600,001 – $750,000, you will receive a concession on your stamp duty. https://www.sro.vic.gov.au/fhbduty
  • If you purchase your brand-new home you should be subject to either a grant of $20,000 for regional purchases or $10,000 for homes not regionally. 
  • A common misconception is that your new home can be as old as five years for you to still be eligible for the First Home Owners Grant. The key is that you must be purchasing your home from the person who built that brand-new property and the property has not changed hands before you made the purchase. i.e “Your new home must be less than five years old. It can be a house, townhouse, apartment, unit or similar, but it must be valued at $750,000 or less and be the first sale of the property as a residential premises.” https://www.sro.vic.gov.au/first-home-owner#fhog 

Irrelevant of how enticing a new incentive may be, always remember that it may be an incredible feeling to have a home, yet when you take out a home loan at such a high debt level, you want to ensure you are finally ready to take on such a purchase. This is once again why I strongly recommend sitting with a lending specialist to give you personalised advice on what will suit your situation. In principle the above schemes become null and void if you cannot service a loan as per the particular lenders servicing calculations.

Ask questions and never be afraid.

Happy house hunting.

Grant Arbuckle

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