Property prices are skyrocketing in Australia, and there has been a whopping 20% increase in the rental population. In the years to come, housing prices are set to rise, and it seems that the housing market is going out of control. The reason for this began in the early 1940s after the Second World War. Back then, the Australian politicians got together to solve the problem of lack of housing.
They spent a chunk of the economy building houses for their citizen, which costed people about three times the average salary. Then, in the 2000s, the housing prices hit a 150% increase, and places like Melbourne and Sydney became one of the most expensive places in the world to buy a house.
Cut to 2021, a year after the pandemic hit the continent, more and more people are finding themselves unable to buy a house. Sadly, we see an entire generation that is unable to buy their house today.
To combat this problem, the government of Australia started the First Home Loan Deposit Scheme.
What Does The First Home Loan Deposit Scheme Entail?
As per this scheme, potential homebuyers in Australia will invest and buy their first property soon. This is a piece of great news for first-time buyers who come in with a limited budget and, of course, high risk. The National Housing Finance and Investment Corporation (NHFIC) provides first-time buyers a guaranteed fifteen percent of their property value. In this case, the new homeowner only needs to pay a small five percent as a deposit.
When a person buys their home, they have to pay less than twenty percent in lenders' mortgage insurance which would have been the case otherwise. So this scheme will reduce their financial burden and allow them to buy a modest home at an affordable price.
Check If You Are Eligible For The Scheme
If you want to apply for the First Home Loan Deposit Scheme, here are the criteria you have to meet:
- You must be a first home buyer with no previous homes, an interest from a previous home, or hold properties independently or jointly with someone in Australia.
- This scheme only supports those who want to own the property for residential purposes. No investment properties are included in it.
- You will have to pay off the loan in the government's schedule throughout the period of the agreement.
- Whether you are a single buyer or are buying a property as a couple, your savings should cover the first five percent, which you have to pay as a deposit. If you have over twenty percent, you cannot apply for this scheme.
- Only married couples can apply together or if they are in a de-facto relationship. You cannot apply for the scheme with your family members or friends.
- To apply, your income singularly should be up to $125,000 for every financial year. Moreover, if you are applying with a spouse, your income should not be more than $200,000, including tax.
- Australian citizens who are temporary residents will be allowed to apply for this scheme.
This is a great scheme that the Australian government is taking the initiative towards. Not only will it encourage more people to save up for their first home, but it will also empower them as a homeowner. However, expert investors say that this scheme is more focused on protecting the banks through the lender's mortgage and increase the boom in the construction industry. The scheme is exactly benefitting the buyer. Therefore, it is ideal for a first-time homebuyer with a constrained budget to invest in the land and buy an old house.