What Is The First Home Loan Deposit Scheme (Fhlds)?
What is the First Home Loan Deposit Scheme (FHLDS)?
The First Home Loan Deposit Scheme (FHLDS) is a scheme designed to help Australians purchase their first home sooner. The scheme was introduced by the Australian Government in 2021, and it is available to first home buyers who have a deposit of at least 5% and meet certain eligibility criteria. The scheme is designed to help first home buyers avoid paying lenders mortgage insurance (LMI) as they may not have enough of a deposit to qualify for a loan without it.
How Does the Scheme Work?
The FHLDS works by providing eligible first home buyers with a guarantee from the National Housing Finance and Investment Corporation (NHFIC) which allows them to purchase their first home with a deposit of as little as 5%. The guarantee covers up to 20% of the purchase price of the property, meaning that the loan would only require a deposit of 5% and the NHFIC will cover the remaining 15%.
Who is Eligible for the Scheme?
In order to be eligible for the FHLDS, potential buyers must meet certain criteria. These include: they must be Australian citizens or permanent residents, they must be 18 years or older, they must be purchasing their first home, they must have a household income of $125,000 or less, and they must have saved at least 5% of the purchase price of the property.
What are the Benefits of the Scheme?
The main benefit of the FHLDS is that it allows first home buyers to purchase their first home with a smaller deposit than would normally be required. This can make purchasing a first home much more accessible for many Australians who may otherwise be unable to do so. It also enables buyers to avoid paying LMI, which can be expensive and can add thousands of dollars to the cost of purchasing a home.
What are the Drawbacks of the Scheme?
Although the FHLDS can be incredibly helpful for first home buyers, it is important to be aware of the potential drawbacks of the scheme. One of the main drawbacks is that the scheme only covers a maximum of 20% of the purchase price, meaning that buyers will still need to save at least 5% of the purchase price in order to qualify. Additionally, the scheme is only available for existing homes, meaning that buyers looking to build their own home will not be able to take advantage of the scheme.
Is the FHLDS Right for Me?
The FHLDS can be incredibly beneficial for eligible first home buyers, but it is important to carefully consider whether it is the right choice for you. If you are eligible for the scheme, it could help you purchase your first home sooner than you might otherwise be able to. However, it is important to carefully consider the pros and cons of the scheme before making any decisions.
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