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10,000 new places for government Deposit Scheme now available

Back at the end of 2019 we told you about the Federal Government’s First Home Loan Deposit Scheme, an initiative aimed at making it easier for people to buy their first home. It proved extremely popular throughout Australia – several people bought properties in Satterley communities after making use of the scheme – and now the second round has opened.

An additional 10,000 places are available for eligible individuals and families interested in purchasing their first home.

A quick recap

The scheme works by making it easier than usual to purchase a first home with a deposit of just 5%. Usually, if you don’t have 20% or more a lender (a bank, for example) will ask you to pay Lender’s Mortgage Insurance (LMI) which can be a significant added expense.

With the First Home Loan Deposit Scheme, the government is guaranteeing 15% of the loan, meaning lenders won’t need to charge you LMI. Under the scheme, you can buy with just a 5% deposit, although will still need to borrow 95% of the property value.

There are several eligibility criteria and you should read them all carefully, but the most important ones are:

  • You need to be a first home buyer with an income of up to $125,000 or a couple with a combined income of no more than $200,000.
  • The combined value of the house and land (if you buy in a Victorian Satterley community) must be no more than $600,000.
  • You need to have saved at least 5% of the value of the property you intend to buy.

How do I apply?

The government, through the National Housing Finance and Investment Corporation, is simply acting as a guarantor in this scheme – you don’t need to apply through them (although they have useful info on their website).

Instead, you apply with a participating lender or through a mortgage broker. There are 27 lenders involved in the scheme, including major banks, smaller banks and credit unions.

Before you apply, though, you should get everything ready, including ID, proof of your savings and a Notice of Assessment from the Australian Taxation Office (ATO) for the last financial year. Your application will be held up if you don’t have these documents.

Will places go quickly?

If the last round is anything to go by, places will go very quickly.

If you’re eligible, you can use the Federal Government’s recently announced HomeBuilder grant as well as the Victorian State Government’s First Home Owner Grant in addition to the Deposit Scheme. It’s unusual to have three major home-buying incentive initiatives in place at the same time and we can only see places going even more quickly this time.

Lodge your tax return early

Another key document you’ll need is a Notice of Assessment from the Australian Taxation Office for the last income year. So make sure you’re quick to lodge your tax return this year if you want to get ahead of the competition.

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