More Help For FHBs
More Australian First Home Buyers (FHB) are eligible for help to get into the market with the Home Guarantee Scheme broadening its reach.
Significant changes were introduced to the Federal Government scheme this week, which aim to help FHBs get into the market with a smaller deposit.
The scheme was originally launched in 2020, allowing FHBs to purchase with a deposit as low as 5% and avoid paying lenders’ mortgage insurance (LMI).
The Federal Government acts as a guarantor for the remainder of the deposit, which is normally 20%. Until now, there have been caps on how many buyers could apply to use the scheme.
From October 1, those caps have been lifted with the scheme now available to all eligible owner-occupiers who have not owned property in the past ten years.
Income caps will also be removed and property value thresholds also lifted significantly.
Canstar data insights director, Sally Tindall, says while the scheme will allow more buyers to enter the property market sooner, it’s vital they understand what they are signing up for when they purchase with just a 5% deposit.
She says while they will no longer have to pay expensive Lenders Mortgage Insurance, a smaller deposit typically means a bigger loan, higher monthly repayments and potentially a higher interest rate.
