The Federal Government has announced that, from 1 January 2020, a new First Home Loan Deposit Scheme may help you buy your first home. However, the catch is that it is limited to the first 10,000 eligible borrowers.
The plan is to help first home buyers purchase a home with only a 5% deposit. Under the scheme, the Government will provide a loan guarantee of up to 15% of the purchase price to individuals earning up to $125,000 per year or couples earning $200,000 per year. This could save you up to $10,000 in lender’s mortgage insurance, which your lender could otherwise insist on when borrowing more than 80% of the purchase price.
Your eligibility for the scheme will also be based on where you live, as the value of homes that can be purchased will be determined regionally, based on the different property markets around Australia. The full details of this scheme have just been released. Make sure that you qualify on all criteria before committing to buy a property relying on this assistance.
There are some risks associated with buying a property on such a low deposit, including that the property value may go down and you could end up owing more than you paid for it. You have to make sure that you can service such a high loan and take into account that if interest rates go up, your repayments are likely to go up.
In addition, in 2017-18, the government introduced the First Home Super Saver Scheme, which allows you to save for your first home via your super fund. Superannuation is taxed at a lower rate than most people’s earnings, so it enables you to save faster. There are conditions attached to this scheme regarding living in the property purchased and limits on the amount that can be saved and withdrawn.
These schemes aim to significantly assist our younger generations in owning real estate, so check out the rules to see if you are eligible for the First Home Loan Deposit Scheme!
Thinking of buying property? Whether you are a first home buyer, investor, retiree or property developer, our solicitors have the experience and expertise to advise and assist you through your property matter. Call us on 02 9976 5222 or email conveyancing@manlylaw.com.au