We all know it’s not easy for First Home Owners (FHO) to get into the property market these days. For a property priced at $400,000 you’ll need around $40,000 to cover the deposit, stamp duty, legal and bank fees and Lenders Mortgage Insurance. There are, however, some ways you can reduce the amount you’ll need.
Assistance options for first home owners
- Have a family member go guarantor for you and you won’t need a deposit or the lenders mortgage insurance
- Get a gift from a friend or family member and save it in your bank account for at least 3 months OR have a suitable rental ledger without needing to wait 3 months
- Consider buying a NEW property rather than an existing one and apply for a First Home Owners Grant (FHOG) through State Government – e.g. if purchasing in regional Victoria grant is $20,000, in Queensland the grant is $15,000 and in NSW the grant is $10,000
- Apply for the First Home Lenders Deposit Scheme Grant and save up to $15,000 in Lenders Mortgage Insurance costs.
When FHOs come to us, we explore all of the above options with them. If they tick the eligibility requirements, we apply for the grants for them as well. Over the past two and a half months we’ve been navigating the process of applying for the new Federal Government’s First Home Loan Deposit Scheme Grant. Not only have we got it down to a streamlined process, we’ve also successfully settled two FHLDS’s for two of our clients, with two more secured already.
About the First Home Loan Deposit Scheme (FHLDS)
First of all, there are really limited places. Each round, only 10,000 places are made available when there are over 100,000 FHOs each year. However, don’t panic, because there are currently around 3,000 places still available from the first round (Jan 2020) and there is another round commencing 1st July 2020. The next round has to last a full 12 months however so planning is key. Each time the Federal Government starts a round and provides 10,000 places, they allocate 5,000 of them to two of the big banks – Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB). The rest are divvied up amongst a range of smaller lenders.
Each lender has their own process in applying for the grant. CBA and NAB are getting on top of that, however some of the smaller lenders haven’t had any experience at all with it so far. That is where we come in. We’ve submitted 6 applications so far, mostly via CBA and MyState, but being a Broker, we are very experienced in navigating lender systems. First off, we find the lender that is most suitable to your situation and then we liaise with them for you.
Each lender has a different process, some require you to pre-book a ticket, others want you to apply alongside your application and others, only once you have pre-approval do you get a ticket. Remember, you need to get your loan and grant via the same lender. So it is best to pick the most suitable lender for your home loan first (out of the pool of lenders that have grant places). Overall, the process is still pretty messy, but it is extremely worth it if you are a FHO. You can save up to $15,000 on Lenders Mortgage Insurance and no-one wants to pay this as it only looks after the lenders, not the applicants.
Out of the 10,000 spots available each round, only 7500 spots are available to brokers. As there are 17,000 brokers in Australia, that is less than half a grant each if it was an even split. So we are smashing it with two successful grants so far and two more secured and ready to settle.
Find out more about our Free First Home Owner Session: ‘Keys to Get in The Door!’. We’d love to help you get your first property!