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TECH TALK: First home loan deposit scheme introduced

TECH TALK: First home loan deposit scheme introduced

Key Changes

Legislation has passed that allows eligible first home buyers to purchase a house with as little as a 5% deposit via the First Home Loan Deposit Scheme.
 
The Government has released consultation papers that provide more detail on how the scheme is intended to operate. The consultation period ends on 4 November 2019.

Key features of the scheme are:

  1. It will commence on 1 January 2020.

  2. The number of loans will be capped at 10,000 pa.

  3. The National Housing Finance and Investment Commission will guarantee the difference between the deposit accumulated (a minimum of 5%) and 20% of the purchase price.

  4. Applicants must be aged 18 years or older, not have held a freehold interest in Australian real property before, be purchasing or building an owner-occupied dwelling and earn a taxable income of up to $125,000 pa (for individuals) or $200,000 pa (for couples combined).

  5. A maximum of two borrowers for each loan, with both applicants required to meet all eligibility criteria (including being legally married or in a de facto relationship).

  6. Regular principal repayments are required (ie the loan cannot be interest only) for the full term of the loan (maximum of 30 years).

  7. Caps will apply to the purchase price to ensure participation is spread fairly across the country (see table below).

  8. The scheme will complement (but not directly interact with) other measures such as the Government’s First Home Super Saver Scheme and First Home Buyer grants, as well as State and Territory based stamp duty concessions.

 
Property price caps

 

State/territory

 

Capital city and regional centres1

 

Rest of state

 

NSW

 

$700,000

 

$450,000

 

VIC

 

$600,000

 

$375,000

 

QLD

 

$475,000

 

$400,000

 

WA

 

$400,000

 

$300,000

 

SA

 

$400,000

 

$250,000

 

TAS

 

$400,000

 

$300,000

 

ACT

 

$500,000

 

 

NT

 

$375,000

 

 

  1. The capital city price caps will apply to large regional centres with a population in excess of 250,000, namely the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong

 

If you would like to know more, talk to Michael Sik at FinPeak Advisers on 0404 446 766 or 02 8003 6865.

This article was originally produced by MLC, to view the full article please click here.

Important information and disclaimer

The information provided in this document is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out.

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