10,000 more chances for first home buyers
Thousands more first-home buyers will be able to take out loans with as little as 5 per cent deposit – without incurring lenders’ mortgage insurance.
The second round of the Federal Government’s first homebuyer deposit scheme has reopened on July 1st, giving 10,000 more people a chance to get into their own home if their deposits fall short.
Put simply, the Government guarantees up to 15 per cent of the assessed property value to a participating lender, which is run through the National Housing Finance and Investment Corporation, according to NHFIC chief executive Nathan Dal Bon.
'To date we’ve seen widespread appeal of the scheme across all states and territories, including regional and metro areas. Notwithstanding the current challenges posed by COVID-19, we anticipate that there will be continued demand for these new 10,000 places. A total of 27 lenders are participating in the scheme.'
To qualify for the second round, first-home buyers will need their 2019-20 Notice of Assessment from the Australian Taxation Office to demonstrate that their taxable income is no more than $125,000 for individuals and $200,000 for couples.
Both National Australia Bank and Commonwealth Bank of Australia offered scheme-backed loans from January 1 this year, while 25 non-major lenders offered guaranteed loans from February 1. All participating lenders are supporting the scheme by not charging eligible customers higher interest rates than equivalent customers outside the scheme.
Although this is great news for people with less deposit saved, it is important to note that a lower deposit would mean a bigger loan.
Buying a $500,000 property with a five per cent deposit, instead of a 20 per cent deposit, would need $75,000 less initially, but it would mean a larger loan. The mortgage repayment would be $395 extra a month and they would pay $67,067 in extra interest to the bank over 30 years (based on CBA’s basic home loan at a rate of 3.13 per cent for an owner-occupier paying principal and interest).
Our team suggest talking to a mortgage broker as they can advise what is best for your situation. Our mortgage broker Lionel can be reached via our office on 9524 0777.
Source – realestate.com.au