With booming housing prices threatening to put the dream of home ownership out of reach for many Australians, the Federal Government has announced an extension to its home loan deposit scheme making it easier for first home buyers and single parents to enter the market.
This week’s Federal Budget saw the Home Guarantee Scheme, formerly the First Home Loan Deposit Scheme, expanded to assist 50,000 more aspiring home owners per year for the next three years.
The $8.6 million program, which more than doubles the annual number of places previously available, allows first home buyers to acquire a home by only needing to save five percent of the deposit, about a quarter of what is normally required. In the case of single parents, the figure is 2%.
Under the scheme, the government will guarantee the remainder of the deposit, saving buyers from the costly burden of lenders’ mortgage insurance (LMI).
The program is open to singles earning up to $125,000 per year and couples with a combined taxable income of less than $200,000 per year and is eligible for residential properties including existing houses, townhouses, apartments, house and land packages and off the plan units.
The government has set caps on the size of the loans for which it will guarantee deposits, depending on where the property is located.
In a positive move for people looking to buy in Caloundra, the cap for our region is now $600,000, compared to $475,000 when the program was initiated, widening the scope of options for those who qualify.
A cursory look on realestate.com.au reveals approximately 25 properties within the 4551-postcode area currently falling under this threshold, providing hope for people looking to get into a home sooner under the scheme, and perhaps even stop paying rent.
While easing the deposit burden is only a small piece of the puzzle, we would welcome any carefully considered plan to improve the prospects of home ownership.