The Federal Government has just announced they’re going to increase the existing price caps for the First Home Loan Deposit Scheme (FHLDS). This may not sound that interesting, but trust me, it’s fantastic news for first home buyers Gold Coast!
When the Government released their 2021-2022 Budget earlier this year, they made a couple of big announcements about the FHLDS and the Family Home Guarantee (a new program to help single parents buy a home). But there was no mention at that point about whether the existing caps (which a lot of people thought were far too low) would be increased. The National Housing Finance and Investment Corporation (NHFIC, AKA the guys that run the programs on behalf of the Government) had already announced the price caps for the Family Home Guarantee, so everyone was waiting (with bated breath!) to see what would happen to the FHLDS. And finally, the Treasury announced that almost all states and territories would benefit from price cap increases (sorry ACT, you missed out!).
What is the First Home Loan Deposit Scheme?
The FHLDS started back in January 2020 with the goal of helping more first home buyers break into the property market. Under the FHLDS, eligible first home buyers can apply for a loan to purchase or build a new house with just a 5% deposit…and they won’t have to pay Lender’s Mortgage Insurance (which is usually required for any loan that has a deposit of less than 20%). This is because the guys at NHFIC act as a guarantor for the remaining 15%. This removes the added risk for lenders (which is why they usually make you get Lender’s Mortgage Insurance), and it becomes way easier for first home buyers to get a home loan (everyone wins!).
Just like any Government-run scheme, there are eligibility requirements that you have to meet in order to qualify. And with only 10,000 spots available in each financial year, the scheme operates on a first-come, first-served basis. But one of the biggest issues with the FHLDS so far has been the price caps. If you were applying for a loan over the specified amount, you automatically became ineligible. But with a red hot housing market on the Gold Coast, there just weren’t that many properties available that were under the FHLDS limit.
What are the New Price Caps for the First Home Loan Deposit Scheme 2021?
The new price caps will be effective from the 1st of July 2021, and they vary depending on what state and what region you’re planning to buy-in. For Queensland, the cap for Brisbane, Gold Coast, and Sunshine Coast (and any other regional centers with a population over 250,000) will increase to $600,000 (up from $475,000 during the 2020-2021 financial year). For the rest of the state, the cap has increased from $400,000 up to $450,000.
So, if you’re a first home buyer Gold Coast and you want to buy a property for $580,000, you’ll still be eligible for the First Home Loan Deposit Scheme 2021 under the increased price cap. And instead of having to save a deposit worth $116,000 (20%), you’ll only have to save up $29,000 (5%). So, you can see why this is such a big deal for first home buyers!
How Do Lenders feel About the Changes to the First Home Loan Deposit Scheme?
So far, 27 lenders are taking part in the FHLDS (including CBA, NAB, and a range of other bank and non-bank lenders). After the Government announced the latest changes to the FHLDS, the executive general manager for home buying at CBA encouraged eligible first home buyers to apply and was quoted as saying that CBA “welcome measures that help first home buyers enter the property market.”
Their counterpart at NAB was also pretty enthusiastic about the increases, saying, “the higher price caps are fantastic news for first home buyers. It will provide greater flexibility for Australians looking to purchase their first home through the scheme.” NAB also reported that demand for places in the scheme “remains incredibly strong”.
What Should Eligible First Home Buyers Do Now?
If you’re a first time home buyer and you’re interested in the First Home Loan Deposit Scheme 2021, your next step should be to give me a call on Ph: 0421 934 033 or Ph: 07 5597 6049. That way, I can answer all of your questions, let you know know how to apply for the first home loan deposit scheme and run you through the fine print and make sure you’re eligible to apply.
Remember, there are only 10,000 places available for the 2021-2022 financial year, so if you want to apply, you need to get moving ASAP!
Phil’s journey from banking to mortgage brokering reflects a career driven by a commitment to personalised service and tailored financial solutions. With a distinguished background in banking, including roles at NAB, ANZ and Lloyds TSB Bank in the UK, Phil spent 12 years developing expertise in personal and commercial finance, while also completing a Bachelor of Business (Finance), followed by an MBA majoring in International Business.