Federal scheme slashes first home deposit barrier to 5 per cent

A FEDERAL scheme aiming to “level the playing field” has come into effect today, enabling all first home buyers to purchase a property with only a 5 per cent deposit.

It means a home buyer in Leopold purchasing a $640,000 property will save $96,000 on a deposit.

The expansion of the first home buyers guarantee was a key election commitment ahead of this year’s federal poll, with income limits and restrictions on the number of people able to use the scheme each year no longer in place.

Changes to the scheme will also allow first home buyers to avoid paying lenders’ mortgage insurance, previously required when a home loan deposit is less than the usual 20 per cent of the property’s value.

Lenders mortgage insurance can add tens of thousands of dollars to the up-front costs of a home, and in the first year of the expanded scheme alone, first home buyers are expected to avoid $1.5 billion in potential mortgage insurance costs.

Property price caps have also seen an increase, with the threshold in Geelong, the Surf Coast and the Bellarine rising from $800,000 to $950,000, in line with average house prices across the region.

Federal member for Corangamite Libby Coker said the goal was to help young people and first home buyers achieve the dream of home ownership sooner.

More than 3,000 people in the Geelong region have already purchased their first homes through the first home buyers guarantee, with the changes coming into effect today giving thousands more the chance to get into the housing market.

“From today, all first home buyers across the Surf Coast, Bellarine and Geelong region will be able to buy a home of their own with a deposit of just 5 per cent — cutting years off the time it takes to save for a deposit,” she said.

“This is about opening doors for young people and families right across our region.

“By cutting the deposit hurdle and removing lenders mortgage insurance, we’re making it easier for first home buyers to purchase their first home.”

Minister for Housing and Homelessness Claire O’Neil said the move would “level the playing field” for a new generation of first home buyers.

“It’s just not right that an entire generation of young Australians have been locked out of the housing market – saving for decades while paying off someone else’s mortgage. So, Labor’s changing it,” she said.

For more information, head to housingaustralia.gov.au/home-guarantee-scheme