First Home Buyers could save a deposit for their first home as much as 3 years earlier in Brisbane under the proposed Government scheme.
Prime Minister Scott Morrison’s announcement to offer First Home Buyers who qualify a guarantee on the deposit for their first home. This means that with just 5% of the purchase price, a new buyer can secure a loan from any lender.
The government intends to borrow $500 million so it can invest the money in the National Housing Finance and Investment Corporation, which would offer guarantees to first-home buyers.
The scheme is likely to be capped at 10,000 loans every year. This translates to about 1 in 10 potential first-home buyers will successfully participate in this program (based on approximately 100,000 new home loans last year)
The National Housing and Investment Corporation would support the buyers for the life of their home loans or until the value of the property rises to a point where they choose to refinance.
The Prime Minister announced that the scheme will be available to first-home buyers with an income of up to $125,000 or a couple with $200,000 where they are both first-home buyers.
“It makes it significantly easier to save the deposit,” said Domain senior research analyst Nicola Powell. “The comparison between the time taken to save a 20 per cent and a 5 per cent deposit is pretty stark.”
Even in Australia’s most expensive market – Sydney –, it would only take a couple one and a half years to save a 5 per cent deposit needed for a $649,000 entry-priced house.
The figures are based on how long it would take couples saving 20 per cent of their net pay — based on the average income for 25 to 34-year-olds in each city — to buy an entry-level property with a 5 per cent deposit, instead of a traditional 20 per cent deposit. Prices were based on sales over the March quarter.
When Will This Be Available?
The Government is yet to release the full details of the proposed rollouts of the scheme. However, Scott Morrison has made it clear that the program is planned to commence in January 2020.
If you are considering purchasing your First Home in the future, register your interest with us today. Even if you are not ready to go right now, we can guide you in your planning and budgeting process to ensure you are in a position to capitalise on the above initiative, once you have found your property.
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**The purpose of the above is for informational purposes and should not be considered as financial advice. Please consider talking to a Mortgage Professional as no one person’s financial situation is the same. to ensure the above fits with your Financial Situation. **