Rush expected for second stage of First Home Loan Deposit scheme

Another 10,000 first-home buyers will get the chance to step on to the property ladder sooner when the Federal Government opens the second round of its First Home Loan Deposit Scheme on Wednesday.

Under the scheme first-time buyers are able to purchase a home in Queensland, up to a maximum value $475,000, with as little as a 5 per cent deposit through one of 25 approved lenders.

The government then guarantees the loan with the lender for the difference between the deposit (5 per cent) and 20 per cent of the total value of a qualifying property.

With an initial 10,000 places offered in January already filled, applications for the second round are expected to be keenly sought, especially by those able to combine it with other first-time buyer initiatives, such as the First Home Super Saver Scheme, First-Home Owner grant and the First Home Builder Scheme.

According to National Housing Finance and Investment Corporation data, the scheme has proved most popular among first-home buyers aged under 30 on middle incomes.

Richard Fennell, the executive of consumer banking at Bendigo Bank, one of the participating lenders, said he expected the response to be even stronger this time around, but applicants needed to move quickly.

“For those who have managed to maintain employment during COVID-19, there has never been a better time to buy a home,” he said.

“Interest rates are at record lows and the RBA has indicated it won’t be lifting it for a few years. The heat has also gone out of the market somewhat, which means buyers will be spoilt for choice among vendors keen to get deals done. Combine these things with some of the other government incentives and buyers can get a significant head start.”

Mr Fennell said borrowers would also avoid paying lenders mortgage insurance, usually payable by anyone with less than a 20 per cent deposit and total up to tens of thousands depending on the value of the property.

“For many first-home buyers, the scheme is the difference between being able to buy now or wait another couple of years to save more for their deposit;” he said.

Maddison Mikelat, 27, of Dakabin, north of Brisbane, was one of the applicants lucky enough to secure a place in the first wave of places and is now living in the home she bought through the scheme.

Ms Mikelaat, who relocated to Queensland from Victoria for work, said she always intended to buy her own home but never thought she would be able to so soon.

“I was renting and trying to save at the same time, and was looking to buy a house by myself, which I found quite challenging. Then I saw the scheme and I thought if I don’t grab the opportunity now it would take me about another five years before I would be able to save up enough for a proper deposit,” she said.

“I’m so pleased because I got almost a new house, which is so much better than what I was expecting to be able to afford.

“It has three bedrooms, a backyard and nice kitchen. It’s just really tidy and nothing like I would have dreamed of owning, not this soon anyway.”

Maddison said her mortgage repayments were about the same as if she were renting, but the bonus was that she building equity in her home, and would eventually own it outright.

“Have a chat with a bank if you are serious about wanting to buy your own home. I ended up going with Bendigo Bank, mainly because it was the fifth largest bank. I was nervous at my first meeting, but it was great. Everyone I dealt with was really friendly and helpful.”

Those wanting to access the scheme must apply through a participating lender but you can apply through more than one lender (see for a full list of participating lenders).

The next round of places in the scheme will not be available until the start of the next financial year on July 1, 2020.

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