First home buyers will soon be able to buy a home with a 5% deposit instead of the usual 20% that most banks require. The government would guarantee a balance of 15 percent, but the borrower would still have to repay it. The scheme, to be implemented in January 2020, aims to help low-income earners buy a property, but only 10,000 applications will be accepted.
Applicants under the Scheme will be subject to eligibility criteria, including criteria in relation to income thresholds and property prices. It is anticipated that the income thresholds will be up to $125,000 per annum for singles and up to $200,000 per annum combined for couples (assessed in the financial year preceding the financial year in which the loan is entered into). The Scheme is expected to apply to owner-occupied loans on a principal and interest basis.
NHFIC intends to provide fact sheets on the Scheme for borrowers and confirm the income and property price thresholds once the Investment Mandate has been finalised by the Government. Other limitations by way of pricing thresholds also apply, depending on the state and regional centre. For example, first-home buyers in Sydney are limited to a purchase price of $700,000; Melbourne – $600,000; Brisbane – $475,000; Perth – $400,000; ACT – $500,000; NT – $375,000; regional NSW – $475,000 and regional Victoria – $375,000.
The same price thresholds for capital cities will also apply to large regional centres with populations over 250,000, including the Gold Coast, Newcastle, Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong.
Finance or mortgage brokers provide property investing advice on a range of borrowing options, however choosing the right one is essential because they will do the legwork and guide you through the loan application process.