14 September 2020

Many first-home buyers still unaware of government scheme

| Karyn Starmer
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City apartments

First-home buyers should be considering getting into the market while the First Home Loan Deposit Scheme is still available. Photo: Supplied.

The latest REIA Housing Affordability Report has shown an increase in the number of loans to first-home buyers in the ACT but lenders are still reporting a lack of awareness of the First Home Loan Deposit Scheme, meaning many Canberra first-home buyers are missing out because they don’t think they’ve saved enough to enter the market.

The REIA Housing Affordability Report released on 1 September showed the number of loans to first-home buyers in the ACT increased by 10.4 per cent over the quarter and 65.9 per cent compared to the June quarter last year. The proportion of first-home buyers in the Territory’s owner-occupier market was 33.0 per cent.

The average loan for first-home buyers decreased 0.2 per cent to $445,495 over the quarter but this was an increase of 20.1 per cent compared to the corresponding quarter in 2019.

Bendigo Bank Mobile Lender Bryan Dacey says there is definite pressure at the first-home buyer end of the market. Housing affordability in the ACT declined over the June quarter with the proportion of income required to meet home loan repayments increasing to 22.3 per cent, an increase of 1.1 percentage points over the quarter and an increase of 0.1 percentage points compared to the corresponding quarter 2019.

“With those types of figures coming out, people really should be considering getting into the market now especially while the First Home Loan Deposit Scheme is there to help them in. This is a unique opportunity,” Dacey said.

Dacey says people often find out about the First Home Loan Deposit Scheme when they contact him looking for guidance on their borrowing capacity. He says they are usually surprised when he tells them that under the First Home Loan Deposit Scheme they already have enough to purchase their first home.

“I tell them if you already have 5 per cent saved, that is enough to buy now and they consistently say they didn’t know about the scheme or that it applied to them,” Dacey said.

The First Home Loan Deposit Scheme allows first-home buyers to purchase a property with as little as a 5 per cent deposit and without the need to take out lenders mortgage insurance. Designed to assist first-home buyers into their own home, the government guarantees the difference between what the first-home buyer has saved and the 20 per cent deposit threshold lenders usually require before they’ll provide a loan without mortgage insurance, saving first home buyers as much as $10,000.

The guarantee only applies to owner-occupied loans with principal and interest repayments and is for genuine first-home buyers with a taxable income of $125,000 or less in the previous financial year.

The price threshold for Canberra properties in $500,000 while for neighbouring areas in NSW the threshold is $475,000. Dacey says to purchase a property under the scheme, all that is required of buyers is a minimum of three months of demonstrated savings of 5 per cent of the purchase price plus around $5000 for legals and costs.

“The ACT government has waived stamp duty for purchases under the scheme giving another saving to eligible first-home buyers of around $12,000.”

With just 382 spots left of the 1000 available, Dacey says buyers should act now to ensure they don’t miss out.

Bendigo Bank has set up a specialist team to handle enquiries from first-home buyers. Call 1300 024 701 to learn more.

For more information on the First Home Loan Deposit Scheme visit the National Housing Finance and Investment Corporation

Bryan Davey

Bendigo Bank Mobile Lender Bryan Dacey. Photo: Region Media.

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Before reading this article today, Bendigo Bank contacted me one regards to an earlier enquiry I made about the Scheme and they told me they had no spots left but could be put on a waiting list (so seems strange that they are advertising available spots!) They also said because I am looking to purchase a “high density” apartment, that I am not eligible which seems like an arbitrary eligibility criteria

I am a Rabbit™6:33 pm 11 Sep 20

It’s because you’re attempting to purchase an overvalued asset with incredibly high leverage. The banks know if you purchase that apartment with only 5% deposit, then you will be in negative equity next year.

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