First home buyers can now apply for the government’s deposit scheme

First home buyers can now apply for the government’s deposit scheme

About 20 banks and financial institutions are now accepting applications to partially guarantee the deposit buyers would use to secure a mortgage on their first home.

The 10,000 applicants will be able to pick up a property with a deposit as small as 5 per cent, and they won’t have to worry about saving extra for lenders mortgage insurance (LMI), a fee usually charged on deposits below 20 per cent as the scheme guarantees the difference.

This is the second 10,000 quota to be guaranteed by the government this year, after an original batch opened up on 1 July. The additional placements are part of the government’s COVID-19 stimulus measures, together with HomeBuilder and JobKeeper.

“From today, first home buyers will be able to apply to First Home Loan Deposit Scheme lending panel lenders to secure a guarantee to build a new home or purchase a newly built home with a deposit of as little as five per cent,” Michael Sukkar said, minister for housing.

“These additional guarantees will … drive more construction and support jobs in the economy at a time it’s needed most.”

There’s 20 banks accepting applications for the First Home Loan Deposit Scheme from today, while a further seven will begin accepting applications from 9 November. (The full list of banks and financial institutions participating in the scheme can be found at the bottom of this article.)

New conditions require budding buyers to snap up new or newly built homes, but there’s also been a lift in the pricing caps for major cities.

Sydney and Melbourne’s caps increased by $250,000 to $950,000 and $850,000 respectively, while Brisbane’s increased by $175,000 to $650,000.

State Capital city/regional centre – new cap Capital city/regional centre – previous cap Rest of state – new cap Rest of state – previous cap
NSW $950,000 $700,000 $600,000 $450,000
VIC $850,000 $600,000 $550,000 $375,000
QLD $650,000 $475,000 $500,000 $400,000
WA $550,000 $400,000 $400,000 $300,000
SA $550,000 $400,000 $400,000 $250,000
TAS $550,000 $400,000 $400,000 $300,000
ACT $600,000 $500,000 N/A N/A
NT $550,000 $375,000 N/A N/A

Source: Federal Government

First home buyers signed a third of last month’s mortgages

First home buyers are accounting for a larger proportion of new mortgage commitments, data from the Australian Bureau of Statistics (ABS) reveals.

There were 13,040 first home buyer loan commitments in September, according to seasonally adjusted data, an increase of 6 per cent.

But this accounted for 34.5 per cent of all owner occupier commitments for the month, Amanda Seneviratne said, head of finance and wealth at the ABS.

“Owner occupier housing loan commitments are at historically high levels, consistent with low interest rates and government incentives,” she said.

Housing Minister Michael Sukkar said the increase had pushed the number of first home buys to a long forgotten high.

“... First home buyers are flooding into the housing market, with the number of loans to first home buyers reaching the highest number in over a decade,” he said.

Another government scheme accounted for an even greater share of new mortgages. The ABS said the government’s Homebuilder scheme accounted for about half of the $17.3 billion spent on owner occupier loans.

First home buyers can also take advantage of the HomeBuilder scheme, provided they meet the eligibility criteria.

Buying into the market four years quicker

The government’s role in guaranteeing part of a 20 per cent deposit has helped first home buyers enter the market years earlier, according to a federal government agency.

The National Housing Finance and Investment Corporation’s (NHFIC) initial report into the first home loan deposit scheme found people were able to buy their first home four years earlier on average.

In New South Wales, it helped them shave five years.

This is because they can secure a home with a deposit one-quarter of the size, while also not having to save extra to cover LMI -- a tax paid to banks that can cost several thousand dollars.

There is a downside to buying a property with a smaller deposit, however. The interest being calculated on a bigger loan will ultimately result in more money being spent on servicing it, Sally Tindall said, research director at RateCity.

“For most lenders, a deposit that falls short of 20 per cent means you’ll have to fork out for LMI which can run well over $10,000,” she said.

“It also means your monthly repayments will be higher and you’ll pay more in interest over the life of your loan.”

Lenders accepting first home loan deposit applications from today

Australian Military Bank

Defence Bank

P&N Bank

Australian Mutual Bank

G&C Mutual

People’s Choice

Bank Australia

Gateway Bank

QBank

Bank of Us

IBA Group

Qld Country Bank

Bendigo Bank

The Mutual

Regional Australia Bank

Commonwealth Bank

MyState

WAW Credit Union

Community First

National Australia Bank

Lenders accepting first home loan deposit applications from 9 November 2020

Auswide Bank

Credit Union Australia

Police Bank

Bank First

Mortgageport

Teachers Mutual Bank

Beyond Bank

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Where can I get all the information about an ANZ first home buyer’s loan?

As a first home buyer, you may require help and hand-holding, and as such ANZ has the buying your first home section on its website full of important information. ANZ also has a form in this section you can fill out to get a free consultation from an ANZ First Home Coach and create your own plan for buying your first home. This coach will help you understand where your current income is being spent and plan for your home loan repayments. You’ll get a clear picture of the costs involved in purchasing a property and how to budget or save for these costs. The coach will help you understand different deposit options and manage your accounts to enhance your savings.

There are three types of ANZ first home loans - Standard Variable, Fixed, and Equity Manager. The features, interest rates, and terms for each are different, and you can compare them here.

When they apply for an ANZ home loan, first home buyers can also get guidance on applying for the First Home Owner Grant (FHOG). This is a one-off government grant that may be available to you when you’re buying your first home. The eligibility criteria for FHOG differs between the different states and territories, which is why it’s helpful to have expert advice when applying.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

Does Westpac offer loan maternity leave options?

Having a baby or planning for one can bring about a lot of changes in your life, including to the hip pocket. You may need to re-do the budget to make sure you can afford the upcoming expenses, especially if one partner is taking parental leave to look after the little one. 

Some families find it difficult to meet their home loan repayment obligations during this period. Flexible options, such as the Westpac home loan maternity leave offerings, have been put together to help reduce the pressure of repayments during parental leave.

Westpac offers a couple of choices, depending on your circumstances:

  • Parental Leave Mortgage Repayment Reduction: You could get your home loan repayments reduced for up to 12 months for home loans with a term longer than a year. 
  • Mortgage Repayment Pause: You can pause repayments while on maternity leave, provided you’ve made additional repayments earlier.

When applying for a home loan while pregnant, Westpac has said it will recognise paid maternity leave and back-to-work salaries. All you need is a letter from your employer verifying your return-to-work date and the nature of your employment. Your partner’s income, government entitlements, savings and investments will may help your application.

How long does Bankwest take to approve home loans?

Full approval for a home loan usually involves a property valuation, which, Bankwest suggests, can take “a week or two”. As a result, getting your home loan approved may take longer. However, you may get full approval within this time if you applied for and received conditional approval, sometimes called a pre-approval, from Bankwest before finalising the home you want to buy.  

Another way of speeding up approvals can be by completing, signing, and submitting your home loan application digitally. Essentially, you give the bank or your mortgage broker a copy of your home’s sale contract and then complete the rest of the steps online. Bankwest has claimed this cuts the approval time to less than four days, although this may only happen if your income and credit history can be verified easily, or if your home’s valuation doesn’t take time.

Why should I get an ING home loan pre-approval?

When you apply for an ING home loan pre-approval, you might be required to provide proof of employment and income, savings, as well as details on any on-going debts. The lender could also make a credit enquiry against your name. If you’re pre-approved, you will know how much money ING is willing to lend you. 

Please note, however, that a pre-approval is nothing more than an idea of your ability to borrow funds and is not the final approval. You should receive the home loan approval  only after finalising the property and submitting a formal loan application to the lender, ING. Additionally, a pre-approval does not stay valid indefinitely, since your financial circumstances and the home loan market could change overnight.

 

 

Does UBank offer home loan pre-approvals?

If you’re applying for a home loan with UBank, you can first get an approval in principle. You’ll need to provide information about your job and earnings, your household expenses, the assets you own and the debts you owe. 

UBank will assign a home loan specialist to discuss these details over a phone call, which can take about 30 minutes. 

The bank will then confirm if you’ve received in-principle approval for your home loan. Depending on how you submit your documents, this could take a few days or a few weeks. If successful, the approval will be valid for 60 days. 

Can I apply for an ANZ non-resident home loan? 

You may be eligible to apply for an ANZ non-resident home loan only if you meet the following two conditions:

  1. You hold a Temporary Skill Shortage (TSS) visa or its predecessor, the Temporary Skilled Work (subclass 457) visa.
  2. Your job is included in the Australian government’s Medium and Long Term Strategic Skills List. 

However, non-resident home loan applications may need Foreign Investment Review Board (FIRB) approval in addition to meeting ANZ’s Mortgage Credit Requirements. Also, they may not be eligible for loans that require paying for Lender’s Mortgage Insurance (LMI). As a result, you may not be able to borrow more than 80 per cent of your home’s value. However, you can apply as a co-borrower with your spouse if they are a citizen of either Australia or New Zealand, or are a permanent resident.

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

How to apply for a pre-approval home loan from Bendigo Bank?

Applying for pre-approval on your home loan gives you confidence in your ability to secure finance while looking at potential new homes. You can get a free and personalised pre-approval home loan from Bendigo Bank in just a few minutes, without any credit checks or paperwork. 

Bendigo Bank offers pre-approval for home loans that allow you to understand the home loan size you may be able to get before looking for a new home. 

With the pre-approval, Bendigo Bank provides an estimate of your borrowing power. This figure incorporates stamp duty, lenders mortgage insurance (LMI) and any first home buyer incentives you may be eligible for. You may also qualify for the First Home Loan Deposit Scheme initiative, depending on your circumstances. 

To apply for a pre-approval on your home loan from Bendigo Bank, all you need to do is fill in a smart form. You could also contact the bank directly on 1300 236 344.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.