How the government guarantee could save you on average $10,000!

Some people may have noticed that at the beginning of this year the Australian Government released a new measure to help first home buyers afford their first home sooner, which was the First Home Loan Deposit Scheme (FHLDS).

However, with only 10,000 slots available it was quickly filled up leaving many first home buyers with FOMO! (Fear of missing out).

If you missed out on the first round of slots don’t fret, because the government will be releasing another 10,000 slots from the 1st of July 2020.

OK, now to get into the details of how the FHLD scheme can help you.

LMI (Lenders Mortgage Insurance)

Usually first home buyers with less than a 20% deposit need to pay LMI, which put simply is an insurance to protect the lender/bank from the borrower in the event of default. This insurance does not protect the borrower in any way and the insurer can pursue the borrower legally to recover the insured amount as well. LMI can cost over $10,000 for a home loan of $500,000, however, will vary depending on the LVR (loan to value ratio) and amount of money you borrow.

FHLDS (First Home Loan Deposit Scheme)

The National Housing Finance and Investment Corporation, which is the government body administrating the scheme guarantees to participating lenders up to 15% of the value of properties purchased through finance by an eligible first home buyer’s home loan. This guarantee allows first home buyers to purchase a property with as little as a 5% deposit without having to pay for lenders mortgage insurance.

There are currently 27 participating lenders across Australia for the FHLD scheme and strict eligibility criteria to qualify for a slot.

Contact us today to find out if you might be eligible for the FHLDS!