The building industry has welcomed the extension of the federal government’s First Home Loan Deposit Scheme, but experts have warned of the risk of borrowers taking on more debt.
It will enable an extra 10,000 buyers who build new homes to get into the property market with a deposit as low as 5 percent while avoiding lenders’ mortgage insurance, with the federal government acting as guarantor on the loans.
Price caps for the scheme will in Brisbane will lift to $650,000 from $475,000.
The First Home Loan Deposit Scheme is an Australian Government initiative to support eligible first home buyers to purchase their first home sooner.
Usually, first home buyers with less than a 20 percent deposit need to pay lenders mortgage insurance. Under the Scheme, eligible first home buyers can purchase a modest home with a deposit with as little as 5 percent (lenders criteria also apply). This is because NHFIC guarantees to a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible first home buyer’s home loan.
If you would like to know more about the First Home Loan Deposit Scheme, please visit: https://www.nhfic.gov.au/what-we-do/fhlds/
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