We’re just days away from 35,000 first home buyer scheme spots becoming available on July 1. If you’re keen to snare a place in the scheme – and buy your first home sooner – here’s how to get ahead of the pack.
Have you heard about the federal government’s Home Guarantee Scheme? (previously called the First Home Loan Deposit Scheme).
It allows you to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance (LMI)
First home buyers who use the scheme fast-track their property purchase by 4 to 4.5 years on average, because they don’t have to save the standard 20% deposit.
Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
But once July 1 arrives, competition for the 35,000 spots will be fierce, so here’s how to give yourself the best possible chance of securing a place.
End-of-financial-year: it’s a phrase that usually sends a shiver up your spine.
But getting your 2021/22 tax return in order asap can give you the inside lane when it comes to jagging one of those 35,000 FHB spots come July 1.
That’s because lenders require your most recent financial information when assessing your home loan application, and that will most likely include your latest tax return.
So now is the time to:
1. Speak to your employer to make sure they’ll provide your PAYG summary in a timely fashion.
2. Book an appointment with your accountant in July (before availability fills up).
3. Start compiling all your work-related expenses.
Getting your tax return completed is just one (important) step in the process.
But it’s far from the only one.
When assessing your application, lenders require you to provide them with an accurate picture of your monthly expenses and discretionary spending, which can take a little time to put together.
And that’s where we come in.
Not only can we help you calculate your monthly budget – which includes your income and expenses – but we can help you crunch those numbers to give you an idea of your borrowing capacity, and therefore, what you can afford to buy.
This is especially important if you want a spot in the Home Guarantee Scheme because it has borrowing caps depending on where you want to buy.
And lenders these days are increasingly strict when it comes to your debt-to-income ratio and home loan serviceability – both of which contribute to your borrowing capacity.
Last but not least, you might have heard that interest rates are almost certain to increase over the next 12 months – so it’s also important to factor in a little buffer if needed.
Places in the Home Guarantee Scheme are generally allocated on a first-come, first-served basis.
And don’t let this year’s expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.
So if you’re a first home buyer looking to crack into the property market sooner rather than later, get in touch today and we can explain the scheme to you in more detail, help check if you’re eligible, and take steps to get the ball rolling.
Then when spots become available on July 1, we’ll be ready to help you apply through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
