The FHLDS (First Home Loan Deposit Scheme) is basically an Australian Government campaign to support first-time buyers who are qualified to buy their first house sooner.
If you are qualified, it means you will have a guarantee from the government to build or buy your first house with as little as a 5% deposit without the need to pay LMI (Lenders Mortgage Insurance).
Basically, as one of the first home buyers using FHLDS lenders you have to determine if you have qualified. If you are eligible, the scheme will enable first home buyers to make their homeownership a reality by offering participating lenders a limited guarantee from the government.
Although lenders’ mortgage insurance policies don’t apply to some lenders, the benefit that customers are likely to get is that they will be able to move their loans to other lenders ready to finance.
How FHLDS Works
Through the NHFIC (National Housing and Finance Investment Corporation), the government in Australia guarantees lenders the difference between the value of your first house and deposit.
This means you may buy your first house sooner and be exempted from paying your LMI, which might save you cash.
If you get approved for the FHLDS, you can take a loan from a lender, and the Australian government will serve as a guarantor. However, the lender will still assess your financial status to ascertain you afford the loan.
Purchasing your first house is a great life transition. As a buyer, you will be searching for up-to-date information and continued support from home loan providers.
Whether you are ready to buy your first house or have just started thinking of getting your first home, remember that in Australia 5,400 people per month search for the FHLDS keyword acronym. So you have to look for reliable lender will provide you with resources, expertise, and products to help you throughout your journey.
Some lenders have been chosen to give government-guaranteed loans under the FHLDS. They do this by giving a guarantee, which will enable first-time buyers with middle and low incomes to buy a house with a 5% deposit.
CBA (Commonwealth Bank) joined NBA (National Australia Bank) as the second participating bank in the FHLDS. These two lenders are expected to provide around 50% of the loans guaranteed for every financial year. Apart from NBA and CBA, other FHLDS lenders include:
- Bank Australia
- Auswide Bank
- Bendigo Bank
- Australian Military Bank
Different timeframes may apply for the scheme, based on the kind of house you purchase. To qualify for this FHLDS, the sale agreement and eligible building contract can have dates when you will sign them.
In order to apply for this scheme, you are subject to certain eligibility criteria. You have to provide documentation to secure your position. Plus, you must be a first-time buyer, be an Australian citizen, and earn less than $125,000 in the last financial year.
Although it is always vital to have emergency funds built up, this Australian scheme needs you to pour into your house deposit instead of saving for rainy days.
Plus, know that shares and other investments are regarded as genuine savings. So if you sit on a deposit of more than 20%, don’t think you may tie it up in stocks to be eligible.