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First Home Buyers usually have more questions and a steeper learning curve. The problem with websites is they are too difficult to find the information you need. As local mortgage broking experts providing various different loan types, we’ve created a knowledge base (also known as a wiki) with lots of different and easily searchable information first home buyers should know.
The federal government announced a new deposit scheme for first home buyers to help them purchase a home sooner.
Normally, if you provide less than a 20% deposit when you buy a property, lenders will expect you to pay lender’s mortgage insurance (LMI), which can cost thousands of dollars.
But with the FHBG, you can put down just a 5% deposit without needing to pay LMI. (That’s because the government guarantees 15% of the loan, taking you up to that 20% mark.)
First Home Loan Deposit Scheme (FHLDS) is now the First Home Guarantee (FHBG) and there are 35,000 new places to eligible first home buyers from 1-July-2023. The existing home scheme is now called the Home Guarantee Scheme (HGS)
To be eligible you must be:
There are further maximum price thresholds.
For more information https://www.nhfic.gov.au/what-we-do/fhlds/
First home Guarantee from 1-July-2023 price caps are as follows:
|FY 2023-24 Home Guarantee Scheme price cap
|NSW-capital city, regional centres (Newcastle, Lake Macquarie & Illawarra)
|VIC-capital city, regional centres (Geelong)
|QLD-capital city, regional centres (Gold Coast & Sunshine Coast)
|SA- capital city
|TAS- capital city
|Jervis Bay Territory & Norfolk Island
|Christmas Island & Cocos (Keeling) Island
The scheme applies only to residential properties below a certain price threshold, which varies from region to region. Otherwise, you can buy almost any property, such as:
If you want to buy in a regional area, and you or your partner have lived there for at least a year, you can apply for a related program called the Regional First Home Buyer Guarantee – all the other conditions are the same.
Interested buyers can apply for the scheme through participating lenders. At Orange Mortgage and Finance brokers, we can determine your eligibility and help you understand the application process
First home buyers finance needs a little more care than usual. Orange finance is based in Perth so if you are looking for some first home buyers finance and you live in Perth, please make contact via the form below.
Usually the first question first home buyers ask is how much they can borrow?
There are two parts to this answer:
The maximum loan amount is calculated as a combination of:
As a result, the amount you can borrow is your income minus expenses minus liabilities minus the new loan repayments. Even though interest rates are around 4%, the banks will stress the calculation assuming interest rates are at least 7.2%. We know interest rates will go up in the future so we need to make sure you can afford it when it does.
Now the second part of the question of what is the maximum LVR you can go to?
Most banks for first home buyers will set the maximum LVR at 95% including Lenders Mortgage Insurance or LMI. LMI is insurance the bank makes you pay to protect them. This means when the bank says you need 5% savings, you actually need 5% plus whatever the LMI costs is. Remember you will also have settlement agent fees and other costs you need to cover. Therefore, when you add this all up, you need to have about an 8% deposit for most lenders. There are a few lenders who will go to 98% LVR, so for that reason, you might need something closer to a 6% deposit.
First home buyer finance can be very specific for certain lenders. Some lenders are giving first home buyer finance applicants special offers on interest rates and/or fee waivers which can save you considerable amount over the life of the loan. For example, there are some lenders waiving their annual fees which could save you over $11,000 over the life of a 30 year loan.