The year of the first home buyer (5% deposit scheme)
Posted Thursday 12th December
Rolling out in January 2020 as part of the Liberal Governments’ ‘First Home Buyers’ grant, some home buyers will no longer need the full 20% deposit to obtain a loan.
Instead, first home buyers will only have to cough up 5%, and the government will act as guarantor for the remaining 15%. The borrowers will still loan and have to pay back the remaining 95% plus interest to their lender.
Scott Morrison’s $500m 5% home loan scheme does, however, have limits. There is a cap at 10,000 grants (only 10% of last years first home buyers) and a threshold on income; couples who earn more than $200,000 p.a and singles who make more than $120,000 p.a will not be eligible for the 5% deposit.
To be eligible in Victoria, the property value cannot exceed $600,000 in Melbourne and the regional centre or $375,000 in the rest of the state.
On the positive side, those who do get the 5% deposit scheme, will enjoy more savings as they won’t have to pay lenders mortgage insurance — saving an estimated $10,000 off their starting costs.
Scott Morrison believes that the scheme will be life-changing for many people as they will settle into a home “years earlier than they would normally be able to do”.
Right now Australia has never seen cheaper loans, it’s hard to believe, but the already record-low 0.75 per cent interest rate is expected to plummet even lower in coming months. The combination of low-interest rates and the 5% deposit scheme will result in the cheapest loans ever seen in Australian history.
As the market made positive steps forward in the second half of 2019, 2020 looks more and more like the year of the first home buyer.
If you want to know the value of your home, contact Clark Next Real Estate today.