Paediatric Occupational Therapist, Caitlin Lamont, 26, used the Government's first Home Loan Deposit scheme to buy her first apartment. Picture: David Swift.
Paediatric Occupational Therapist, Caitlin Lamont, 26, used the Government's first Home Loan Deposit scheme to buy her first apartment. Picture: David Swift.

How to buy your first home with a five per cent deposit

Aspiring first-home owners hoping to crack into the property market sooner have a renewed opportunity to do so and only need a 5 per cent deposit saved up.

The Federal Government's First Home Loan Deposit Scheme started in January and reopens on July 1 with its second tranche, providing 10,000 fresh spots for entry-level buyers.

Eligible applicants cannot have taxable incomes of more than $125,000 for singles, and a couple's joint income cannot exceed $200,000.

Occupational therapist Caitlin Lamont, 26, said her dream of buying a property was recently fast-tracked after taking up the scheme.

"I saved up about $20,000 when I was living with my mum and started my first full-time job - I've saved up the deposit in about a year," she said.

"It halved the time that I would have had to save, whereas without the scheme it would have taken more than double that."

Paediatric Occupational Therapist, Caitlin Lamont, 26, used the Government's first Home Loan Deposit scheme to buy her apartment with just a five per cent deposit saved up. Picture: David Swift
Paediatric Occupational Therapist, Caitlin Lamont, 26, used the Government's first Home Loan Deposit scheme to buy her apartment with just a five per cent deposit saved up. Picture: David Swift

Ms Lamont purchased a two-bedroom apartment for $405,000 in Blacktown in Sydney's western suburbs and her mortgage repayments are about $1580 a month.

Using the scheme, borrowers only need a 5 per cent deposit saved up and the government will act as a guarantor for the remaining 15 per cent.

This means they avoid the hefty charge of lenders' mortgage insurance - a cost that protects the lender, not the borrower, if there is a default on the loan.

CUA chief customer officer Megan Keleher urged people to apply as soon as possible because "the spots go pretty quickly".

"People need to have their own personal finances in order including getting their 2019-20 tax return in early - it's a requirement of the scheme," she said.

"The major advantage is they don't have to take out mortgage insurance.

"It's fast and it saves them money."

Applicants can register their interest with eligible banks from July 1 while they wait for their tax return to be processed.

The Federal Housing Minister and Assistant Treasurer, Michael Sukkar, said the scheme attracted applicants from across the country and the first 10,000 spots were quickly filled.

Federal Housing Minister Michael Sukkar and Tasmanian Minister for Housing Roger Jaensch. Minister Sukkar said the First Home Loan Deposit Scheme will help first-time buyers get into the market sooner. Picture: Chris Kidd.
Federal Housing Minister Michael Sukkar and Tasmanian Minister for Housing Roger Jaensch. Minister Sukkar said the First Home Loan Deposit Scheme will help first-time buyers get into the market sooner. Picture: Chris Kidd.

"As expected, we saw applications for guaranteed loans from all parts of our community, be it in our capital cities, regional centres or rural areas," he said.

"From 1 July, a further 10,000 guarantees will be available, and, given the enthusiasm shown by Australians, I have no doubt they will be in high demand."

HOW IT WORKS

• From July 1 10,000 places for the 2020-21 financial year will be released.

• 5000 spots are available with CBA and NAB.

• 5000 spots are available with 25 smaller lenders.

• Eligibility checks include an income test, prior property ownership test, minimum age test, deposit requirement and owner-occupier requirement.

• For more information visit nhfic.gov.au.



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