First Home Loan Deposit Scheme Update

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The federal government has recently announced that it will reissue unused guarantees from the 2019-2020 financial year from buyers who were unable to complete the purchase of their first home under the First Home Loan Deposit Scheme (FHLDS).

This opens up 1,800 opportunities for first home buyers to purchase a home under the scheme. Of the 27 participating lenders, so far NAB and Commonwealth Bank have announced that additional places will be available under them.

If you’re in the process of purchasing or building your first home, it’s a good idea to check whether you are eligible for the scheme.

What is the first home loan deposit scheme?

At the start of 2020, the Australian Government launched the First Home Loan Deposit Scheme (FHLDS). This initiative aims to support eligible applicants to purchase their first home sooner.

Under the FHLDS, eligible first home buyers can purchase a home with a deposit of five per cent (or higher) without paying lenders mortgage insurance, which is usually required when purchasing a home with a deposit less than twenty per cent.

This is made possible as the National Housing Finance and Investment Corporation (NHFIC) guarantees up to fifteen per cent of properties purchased under the FHLDS. It thus takes over the risk to the lender if the borrowers default under the loan in place of the loan mortgage insurer.

If you require further assistance in purchasing your home under the FHLDS, contact us at Loanscape today!