FIRST HOME GUARANTEE SCHEME - MORTGAGE BROKER

First Home Guarantee - Housing Australia

 

Housing Australia is a agency that is responsible for the overseeing of the First Home Guarantee on behalf of the Australian Government. 

 

They describe this guarantee on their website 

https://www.housingaustralia.gov.au/support-buy-home/first-home-guarantee

 

The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Government initiative to support eligible home buyers to buy a home sooner. It is administered by Housing Australia on behalf of the Australian Government. Under the FHBG, part of an eligible home buyer’s home loan from a Participating Lender is guaranteed by Housing Australia. This enables an eligible home buyer to buy a home with as little as 5% deposit without paying Lenders Mortgage Insurance. For the FHBG, any Guarantee of a home loan is for up to a maximum amount of 15% of the value of the property (as assessed by the Participating Lender). This Guarantee is not a cash payment or a deposit for a home loan.

 

What is it?

 

• Under normal conditions when you are looking to purchase a property with a 5% deposit you would be subject to Lenders mortgage insurance (LMI) these costs vary depending on the size of your loan but can regularly be seen between $10-30k.

• With the assistance of this FHBG that LMI fee is guaranteed by the Australian Government, saving you from having to pay for it!

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Price caps and postcode restrictions

 

• The scheme has certain restrictions in place for where and how much you are able to spend to be eligible.

  • You can find the postcode look up tool here.

• This tool will give you a breakdown of if they accept this area as a location for property within this scheme and at what price point they will allow up to.

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How it might be suitable for you?

 

• If you meet the eligibility requirements set out in the scheme as well as meeting the requirements set out by one of the participating lenders you can take advantage of this scheme.

  • Check you eligibility here for a place in the scheme

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Comparison Example  - 

 

• Sarah and her partner Brett are looking to purchase their first home.

• They have managed to qualify and reserve a spot on the scheme with a pre approval at one of the participating lenders.

• They have found a property in QLD for $500,000.

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• Estimated Funds Breakdown with the scheme

  • Purchase Price - $500,000

  • Loan Amount - $475,000

  • Governments Fees and Charges - $2,020

  • LMI - $0

    • Deposit Required - $26,796

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• Estimated Funds Breakdown without a scheme place

  • Purchase Price - $500,000

  • Loan Amount - $461,650

  • LMI - $13,270 (gets added on to loan amount)

  • Total New Loan -$474,920

  • Governments Fees and Charges - $2,020

    • Deposit Required - $40,146

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As you can see, with the scheme you are able to purchase a property with $13,350 less savings than without it. The difference only gets bigger with the higher the purchase price is.

 

If you would like to get more information and talk with a local mortgage broker please contact us as we would love to help with your First Home Buying journey!