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Last month the government announced that the expanded Home Guarantee Scheme would begin on 1 October, meaning eligible first home buyers would be able to buy a property with as little as a five per cent deposit.
Property price caps will be increased while income caps will be removed, and there’s unlimited places meaning there’s even more opportunity for first home buyers to get their foot on the property ladder. Read more about the five per cent deposit scheme.
With 1 October coming around fast, now is the time to get prepared and make sure you’re in the best position you can be if you’re looking to buy your first home. Competition will be high, so take a look at our checklist to find out what you can do now to get ready for the first home buyer deposit change:
Check your eligibility
To claim the five per cent deposit, you must be a first time buyer and an Australian citizen or permanent resident. You can buy with a family member, friend or partner as long as they haven’t owned a property in the last 10 years. You can use the Home Guarantee Scheme Eligibility Tool to check your eligibility.
Assess your financial position
Even though the deposit is lowered, there are still other upfront costs such as stamp duty, legal fees, building inspections, property inspections, moving, which you’ll need to budget for. Possible stamp duty concessions vary by state. A lower deposit also means a 95% loan, so interest and repayments will be higher compared to paying a higher deposit upfront. Having an extra buffer will help you avoid being stretched thin.
Find a broker
A mortgage broker can help you understand the scheme, and the risks. Over 30 lenders are participating in the new scheme, your broker will be able to help you find a participating lender that’s right for you.
Our partners at Loan Market can help you navigate the options to map out the right approach for your situation - with competition expected to intensify, having a plan in place and talking through with a broker could make all the difference. It’s never too early to find a broker and start planning.
Get pre-approval
Through your broker, you can apply for a loan pre-approval to give you an idea of how much you’re eligible to borrow to help move fast once you spot a property you’re interested in. For loan applications you’ll need to provide key documentation such as pay slips, proof of savings, ATO notices of assessment, identification, etc. so make sure you prepare in advance to speed up the process.
Watch the market and listings now
Although the new scheme doesn’t kick in until 1 October, it doesn’t mean you can’t browse the market, or even purchase, before then. Do your research and keep up to date with what’s happening in your preferred market - your local Ray White agent can provide the latest house price reports and insights to help give you a better idea. If you do purchase or you’re in negotiations before 1 October, you could still be eligible for the 5% deposit as long as settlement takes place after 1 October. Every situation is different, and timing here is crucial, so if you have any questions, reach out to your nearest Loan Market broker.
Be ready to move quickly
From 1 October, demand is likely to increase with many first home buyers wanting to take advantage of the five per cent deposit scheme. Make sure you’re fully prepared using our checklist and by speaking with your local Ray White agent and Loan Market broker.
