Imagine buying your first home with a 5% deposit and not having to pay lenders mortgage insurance (LMI).
Sounds good, right?
Well, the federal government has finally revealed more details in a draft mandate for the scheme, including the property price caps in each state.
Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.
– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)
– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)
– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)
– WA: $400,000 (Perth) and $300,000 (rest of state)
– SA: $400,000 (Adelaide) and $250,000 (rest of state)
– TAS: $400,000 (Hobart) and $300,000 (rest of state)
– ACT: $500,000
– NT: $375,000
Ok, so currently people with a deposit of less than 20% usually have to pay LMI.
But under the government scheme, eligible first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.
Now, it’s important to note that this is not a handout – it’s simply a government guarantee.
But this guarantee could be very helpful, as it could save you as much as $10,000 in insurance.
The scheme is due to commence on 1 January 2020.
In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).
But here’s the catch: the offer is limited to just 10,000 first home buyer loans each year. That’s less than 10% of the 110,000 Australians who bought their first home in 2018.
That’s the million-dollar question! (or, depending on where you live, the $400,000 question).
It looks as though applications will be granted on a “first come, first served” basis.
So if you’re considering purchasing a property but don’t have a 20% deposit saved up yet – get in touch.
We’d love to run you through the scheme in more detail and help you plan ahead for the new year.
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