The National Housing Finance and Investment Corporation (NHFIC) has launched an interactive tool to help first home buyers (FHBs) assess their eligibility to take part in the federal government’s First Home Loan Deposit Scheme (FHLDS).
Every year, the FHLDS will enable up to 10,000 FHBs secure a home loan with a deposit as low as 5 per cent.
The federal government intends to guarantee an additional 15 per cent, potentially saving FHBs thousands of dollars in lender’s mortgage insurance (LMI) – which usually applies to mortgages with a loan-to-value ratio (LVR) of over 80 per cent.
The government hopes the scheme will enable FHBs to get onto the market faster by reducing the time required to save a 20 per cent deposit and eliminating the added expense of LMI for those with smaller deposits.
The newly released online tool consists of an interactive questionnaire, which will indicate whether potential participants are eligible to apply by asking questions relating to citizenship, whether or not they have held an interest in Australian real estate, and annual income.
The result is intended to be used as a guide for eligibility but does not serve as any part of the application process.
Applications to take place in the scheme will open on 1 January 2020 and can be lodged directly through the participating lenders or their brokers. The NHFIC will not be taking any direct applications.
The eligibility questionnaire has been launched alongside a “property price lookup tool”, which allows potential applicants to search the suburb or postcode of a property and be informed of the relevant home purchase price cap associated with that property in that particular region.
The purchase price caps vary between capital cities, large regional centres with a population of over 250,000, and regional areas. Price caps also vary depending on state.
The tools have been created in a bid to help FHBs understand whether or not they can be considered for the government-backed loan and what they might be able to purchase in the event that they are eligible to apply.
Last month, NAB was announced as the first lender that would be joining the NHFIC’s lender panel. The second major bank has not yet been revealed.
According to the NHFIC’s investment mandate, the two major banks on the lending panel will only be permitted to write up to 50 per cent of the 10,000 guarantees allocated per financial year.
The NHFIC has said that it will announce the full panel of participating lenders (comprising both non-majors and non-banks) by 20 December 2019 at the latest, with the scheme due to commence on 1 January 2020.
According to the NHFIC, members of the panel will be chosen on the basis of competitiveness of offerings, geographic reach, customer care and their ability to meet the 1 January deadline for the implementation of the scheme.
Both the NHFIC and the federal Minister for Housing and Assistant Treasurer, Michael Sukkar, have stated that members on the lending panel will not be able to charge eligible customers higher interest rates than equivalent customers outside the scheme.
The NHFIC has also reportedly been working closely with a broker association to build a broker resource portal that will supply brokers with relevant information for getting their FHB clients involved in the FHLDS.
The resource portal is due to be online and functional prior to the commencement of the scheme on 1 January.
[Related: FHB reforms plagued by uncertainty]
Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.
Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency.
Hannah graduated from Macquarie University with a Bachelor of Media and Journalism.