What Is The First Home Owners Loan Deposit Scheme?
What is the First Home Owners Loan Deposit Scheme?
The First Home Owners Loan Deposit (FHOLD) Scheme is a government-funded initiative that was introduced in 2020 to help Australians purchase their first home. In essence, the scheme provides eligible first home buyers with a loan guarantee of up to 5% of the purchase price of their property, so they can enter the property market with a smaller deposit.
Who is Eligible For the Scheme?
To be eligible for the FHOLD Scheme, applicants must meet the following criteria:
- Be aged 18 or over
- Be an Australian citizen or permanent resident
- Have a household income of less than $125,000 per annum (or $200,000 for couples)
- Have saved at least 5% of the purchase price of their property
What Types of Property Can Be Purchased?
The FHOLD Scheme can be used to purchase existing residential properties (houses, townhouses, apartments, etc.), as well as newly constructed homes. The property must be used as your primary place of residence, and the loan guarantee can be used for up to 80% of the purchase price.
What Are the Benefits of the Scheme?
The FHOLD Scheme offers a number of benefits for first home buyers. Firstly, it enables buyers to purchase a home with a much smaller deposit, as the loan guarantee covers 5% of the purchase price. This allows buyers to enter the property market much sooner than they would be able to if they had to save a larger deposit. Secondly, buyers can access lower interest rates on their mortgage, as the loan guarantee reduces the amount of risk for the lender.
How Do I Apply?
To apply for the FHOLD Scheme, you will need to fill out an application form, which can be obtained from the Department of Home Affairs website. You will need to provide evidence that you meet the eligibility criteria, such as proof of identity and income, as well as a deposit statement from your bank. Once your application has been approved, you will be issued with a certificate of eligibility, which you will need to present to your lender when you apply for a mortgage.
Conclusion
The First Home Owners Loan Deposit Scheme is a great initiative for first home buyers, as it enables them to purchase a home with a much smaller deposit than they would otherwise be able to. Additionally, they can access lower interest rates on their mortgage, as the loan guarantee reduces the risk to the lender. If you meet the eligibility criteria, it is definitely worth considering applying for the FHOLD Scheme.
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