How to buy your first home faster
WANT TO GET ON THE PROPERTY LADDER? WE SPOKE TO EXPERTS ABOUT THE FIRST HOME LOAN DEPOSIT SCHEME WHICH HELPS OPEN THE DOOR
AUSTRALIA’S relaunched First Home Loan Deposit Scheme is proving popular among home buyers as record low interest rates, government incentives and lower lifestyle spending make it easier to buy property sooner.
Lenders report thousands of the 10,000 spots released this month have already been reserved, and say many people don’t understand all the schemes and strategies that open the door to home ownership.
The deposit scheme started in January with 10,000 places, and another 10,000 became available on July 1. It allows borrowers with just a 5 per cent deposit to enter the market and avoid expensive lenders mortgage insurance charges that usually apply if people haven’t saved a 20 per cent deposit.
Beyond Bank Australia’s general manager of customer experience, Nick May, said the rush on scheme spots this month showed now was “a really great time to buy with so many benefits for first-home buyers currently on offer”.
“Many states also have their own local first-home buyer grants on top of the scheme,” he said.
The Federal Government also recently launched $25,000 HomeBuilder grants for renovators and home buyers, while the First Home Super Saver Scheme allows people to save inside their low-tax superannuation fund.
The deposit scheme and other incentives do, however, have caps and conditions, so borrowers should do their homework.
Clancy Bennett, 37, bought his first home using the scheme earlier this year and found the process fast and easy. “I had just enough for a full deposit, but obviously every little bit helps – the other fees all add up,” he said.
Mr Bennett suggested potential first-home buyers talk to others – banks, accountants, lawyers and friends who had bought property. “There’s no point waiting,” he said.
Gateway Bank chief executive officer Lexi Airey said eligibility criteria for the FHLDS included earning no more than $125,000 as a single or $200,000 as a couple, and the purchase price being within allowed thresholds.
“It’s worth remembering that having a smaller deposit also means borrowers will pay more interest over the life of the loan,” she said. “We have found that awareness of the full spectrum of government support schemes still remains low, so we encourage firsthome buyers to do their research.”
Real Estate Buyer’s Agents Association president Cate Bakos said the FHLDS had been great but was not the “be all and end all”.
“You don’t need to have been part of that incentive to have a successful purchase,” she said.
Ms Bakos said prospective home buyers should think about what their repayments would look like. “Don’t chew off more than you can confidently afford,” she said.
Withdrawing super through the government’s COVID-19 early access scheme is not recommended for deposits, as lenders had been refusing mortgage applications where borrowers’ accounts showed “any sign of accessed super as a crisis payment”, Ms
Bakos said.