Our ears perked up when Prime Minister, Scott Morrison promised first home buyers would only need a 5 per cent deposit — instead of the usual standard of around 20 per cent — if his government was re-elected.
Usually the biggest hurdle for First Time Buyers is saving the large deposit necessary to buying when also paying rent.
The Coalition has promised to help 10,000 first homebuyers into the market by topping up their 5% deposits with a government guarantee for 15% of the loan starting 1 January 2020. This scheme speeds up first time buyers’ saving time and eliminates the need to pay lenders mortgage insurance, which protects banks from defaults and often costs borrowers about $10,000
The program would be available to first home buyers with an income of up to $125,000 or couples with a joint income of up to $200,000.
All of the normal credit checks on the borrowers will still take place to ensure serviceability of the loan amount. However, reaching a goal of 5% of a house and land price is much more attainable. Particularly for low- and middle-income earners, this will be a great assistance. It is not free money. It is just making entry into the market a little easier- and then you off as a homeowner paying your own mortgage instead of your landlord’s.
Many people can easily afford a the weekly repayments of a mortgage but have struggled to save enough for a deposit while also paying rent.
This is a fantastic opportunity for First Time Buyers to get into the market and buy their first home.
Are you eligible? The full details of the scheme have yet to be released. Here is what we know so far:
Single people earning up to $125,000 OR couples earning up to $200,000 will be eligible
Saved 5% of the value of the home
There will likely be regional caps on the value of homes for which it will guarantee a deposit
The scheme availability is limited to 10,000 homebuyers
Stay tuned for more information as it is released to the public.
Do you have home ownership in your scopes? Contact the team at Ellis Developments to learn more about options, process, and availability. Owning your own home is closer than you think. We are here to help.