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Good news for First Home Buyer (FHB), the Commonwealth Bank, NAB and several other banks have started accepting requests from the first-home buyer to sign up for First Home Loan Deposit Scheme (FHLDS) under the New Home Guarantee.
On Saturday 3 October, the Government announced that the FHLDS had been extended by 10,000 places as part of the 2020-21 Federal Budget. The New Home Guarantee will support 10,000 eligible Australians in this financial year to get a new first new home.
This scheme supports FHB to buy a house with only 5 to 20 per cent of deposit. The difference between the original FHLDS and the New Home Guarantee is that the new scheme only allows FHB to build or purchase brand new homes, while the previous scheme allows FBH to buy any type of dwelling.
The New Home Guarantee also has different caps on the property's value, as follows:
"We know that saving for a deposit can be difficult. Given the challenges faced by many of our customers over the past few months, we support any initiatives that play a constructive role in helping first home buyers get onto the property ladder and support the broader economic recovery, specifically in the construction industry," said Commonwealth Bank group executive Angus Sullivan.
The National Housing Finance and Investment Corporation (NHFIC) is in charge of administering the FHLDS and New Home Guarantee scheme.
To be aware that the scheme is not active yet, as the NHFIC is still determining the eligibility process. However, the waitlist will help you to be first in line to apply when the scheme does become available.
"NHFIC is currently working with the FHLDS participating panel lenders on the implementation of the NHG," the corporation said on its website.
"Further information and updates will be provided on the NHFIC website in the near future."
All applications for the FHLDS need to be direct with one of the scheme's participating lenders. NHFIC doesn't accept applications directly from first home buyers.
Would I be eligible for
the First Home Loan Deposit Scheme?
- Must be Australian citizens who are at least 18 years old. If you apply as a couple, both of you must be Australian citizens. Permanent Resident Holder is not eligible.
- Singles with a taxable income of up to $125,000 per year. Couples with taxable income of up to $200,000 per year.
- Couples must be two persons who are married or in a de-facto relationship. Therefore, siblings, a parent and chile or two friends buying together would not be eligible.
- Applicants must have a deposit of at least 5% but no more than 20%
- Must live in the property as the principal place of residence within six months of settlement. Applicants must also continue to live in the property for as long as their loan "has a guarantee under the Scheme".
- Loans under the Scheme usually require scheduled repayments of the principal (as well as the interest) of the loan for the full period of the home loan contract. However, if the loan relates both to the purchase of vacant land to the construction of a house on the land, the loan may be eligible even if the terms of the loan agreement permit interest-only repayments for a specified period.
- Applicants must be first home buyers who have not previously owned or had an interest in a residential property, either on their own or jointly with someone else (including a body corporate and company-owned properties, regardless of whether it was an investment or owner-occupied property and whether it was ever lived in).
The process to obtain
the First Home Loan Deposit Scheme
1. Choose a participating lender or their broker
- Express your interest to be considered for the scheme.
2. Reserve a place
- Your chosen participating bank will assess your eligibility for a spot. If you are eligible, and there is a spot available, you will be reserved a place for your loan.
- A list of required standard documents to provide proof (other documents may be required):
o Your ID to show your full name and date of birth
o Medicare number
o Notice of Assessment for your previous taxable income
o Proof of Australian citizen
3. Finalise your budget
- At this step, you will have 10 days to obtain conditional approval/pre-approval for your loan from your lender. This will confirm how much you can borrow and how much you can spend on a home.
4. Find a house:
- After receiving pre-approval, most lenders will give you 90 days to find, negotiate for and sign a contract on a property, ensuring the home is priced below the property price threshold for its location.
5. Buy the house:
- When you sign a contract to buy your chosen house, you then have up to 30 days for the settlement period – to allow time for the bank to finalise the loan, and for the usual legal processes that allow a house contract to settle. If you are having trouble completing this process on time due to delays stemming from the COVID-19 crisis, the NHFIC says that you could be eligible for a 90-day extension.
6. Move in:
- You must then be living in the house within six months of settlement.
Participating Lenders under the First Home Loan Deposit Scheme
If you need more information or any further concern, please do not hesitate to contact us.
Kind regards,
𝐾𝑖𝑒𝑛 𝑃ℎ𝑎𝑛 & 𝑃ℎ𝑢𝑜𝑛𝑔 𝑁𝑔𝑢𝑦𝑒𝑛.
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