Why Now and 2020 is the Time to Buy Property
Millenial’s and First Home Buyers will never see Better Conditions
Millennials and first home buyers may not yet have seen the urgency but over the next year, its the time to buy.
With record-low interest rates and more cuts on the way, APRA has reduced serviceability buffers, there are substantial stamp duty concessions available, and the federal government’s 5% deposit scheme is just months away from implementation.
The Government’s First Home Loan Deposit Scheme will be available to 10,000 would-be homeowners in 2020, however with the Australian Bureau of Statistics indicating January 2019 saw 8,500 first home buyers step onto the property ladder, the chances are high that many first home buyers will have missed out on the scheme before the end of February 2020.
First Home Loan Deposit Scheme on 1 January 2020
So, what does the new scheme mean for first home buyers (FHBs) and what sorts of rules might apply?
The Federal Government’s First Home Loan Deposit Scheme, due to launch on 1 January 2020, is designed to help eligible Australian first home buyers with deposits as low as 5% to get a loan, without needing to pay for lenders’mortgage insurance (LMI).
The scheme is anticipated to save purchasers around $10,000 in Lenders Mortgage Insurance, which covers banks from purchasers who default on mortgage repayments, but not the purchasers themselves.
So, who’s eligible?
Singles on an income of up to $125,000 per annum and couples earning $200,000 will be eligible to apply, but there will be just 10,000 places per year.
The Government says the scheme will make the great Australian dream of homeownership a reality, while also protecting the value of homes for existing owners.
Given that it takes the average household nine or ten years to save a twenty percent deposit, the proposed scheme should shave many years off the period of time in which you rent before buying a home.
How will it work?
The Government will offer $500 million in the form of equity using the National Housing Finance and Investment Corporation.
The value of homes that can be purchased under the Scheme will be determined on a regional basis, reflecting the different property markets across Australia.
Working in conjunction with the First Home Super Saver Scheme, the scheme will be available to eligible Australians that have saved a 5 percent deposit.
The Government then tops up the 15 percent difference between your 5 percent deposit and the full 20 percent that is required – effectively guaranteeing your loan.
It’s definitely not ‘free money’ but the Government’s guarantee will be permanent, unless a purchaser re-finances.
Lenders will still be required to conduct all the normal checks to make sure borrowers can afford their repayments. So in reality, you’ll still need to be able to service the full amount of money borrowed.
For those that are ready to buy now, our recommendation would be to not hold back.
First National Real Estate Basso doesn’t anticipate sudden changes in property prices between now and the end of the year, but some economists are already suggesting Australia’s housing market may finish the year with prices between three to five percent higher than they were in January 2019.
‘For those that are ready to buy now, my recommendation would be to not hold back.’ says Paul Basso.
But, First home buyers are set for a significant leg up with a new initiative to slash the size of a home loan deposit. It can take nine to 10 years for an average household to save a deposit.
This is good for Australians with the goal to buy their first home, can now cut years off the time it takes to save up.
So When you’re ready, We’re here to help.
Ask us for a free copy of our Home Buyers Guide today or visit www.firstnational.com.au , click the Services menu and then download from our Real Estate Guides section.
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