First Home Loan Deposit Scheme

Discussion in 'Loans & Mortgage Brokers' started by Morgs, 12th Dec, 2019.

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  1. Morgs

    Morgs Well-Known Member Business Member

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    Some news hot off the press for First Home buyers, with the confirmation of lenders participating in the scheme.

    I suspect these 10,000 spots will go quickly and inject a fair bit of competition into the market.

    More details here:
    How to apply - NHFIC
    Eligibility - NHFIC

     
  2. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Westpac were not allowed to be involved due to the anti money laundering issues.

    Yeah Richard some suspect that 9 in 10 will miss out. I wonder how "subject to finance" offers will fare with this issue. Many REAs and vendors may be unwilling in the new year
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Best to outline what it is:

    First Home Loan Deposit Scheme
    The First Home Loan Deposit Scheme is a Australian Government initiative to support eligible first home buyers purchase a home sooner.

    It does this by providing a guarantee that will allow eligible first home buyers on low and middle incomes to purchase a home with a deposit of as little as 5 per cent.

    The Scheme will support up to 10,000 loans each financial year, starting from 1 January 2020.
     
  4. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    To be eligible for the scheme, you have to earn less than $125,000 as an individual or less than $200,000 as a couple annually. Property price thresholds are strict. As well as eligibility. And the loans must be P&I. Only up to 2 borrowers.

    I havent been able to ascertain what happens if an owner defaults. Previously the lenders mortgage insurer would pursue their loss. I question a few unexplained issues

    1. Says the property must be the borrowers owner occupied property. Can they move out while the loan is tied to the scheme ? (ie LVR is above 80%)
    2. If they default what happens ? Is it like LMI and the guarantee loss can be recovered ? Will the NHFIC chase this ?

    https://www.nhfic.gov.au/media/1167/nhfic-investment-mandate.pdf

    Tip - Out of 10,000 loans only 5,000 may be written by major banks.
    Tip 2 - A second tranche is expected in July
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    About a week before the election I wrote a letter to my local member Michael Sukar, about how this could work. He did respond positively and it turns out that he's taken the lead on it.

    My suggestion was that the government acts in the same manner to a family guarantee. The family only has limited liability for the portion borrowed above 80% of the property value. If the borrower defaults, the lender is likely to easily recover at least 80% of the property from the sale. The government is risking about 15%.

    What hasn't been announced yet is the lending criteria that the submissions have offered. An household income of $200k easily services a $600k loan. Part of my submission suggested that the government protect itself by tightening the lending criteria for these loans to protect themselves from the borrowers defaulting. None of the lenders have actually stated how they'll qualify borrowers for this.

    Truth is I don't agree with this sort of incentive, but if they're going to do it, there's good and bad ways to go about it. So far it looks like the government is implementing it quite well.

    Pro tip: I think there's opportunities for everyone in this...
     

The shift to the regions has been quite profound with Millennials and Gen X leading the way. It seems affordability, lifestyle, and working from home have been the key drivers from which these generations have been able to take most advantage.