The Federal Budget has given a boost to an extra 10,000 first-home buyers trying to crack into the property market.
The new places have been extended in the First Home Loan Deposit Scheme (FHLDS) and allow borrowers to borrow with just a 5 per cent deposit without incurring the costly lenders’ mortgage insurance burden.
The FHLDS initially released 20,000 places at the start of the year and all places were fully allocated by June.
To qualify you have to satisfy means testing and have income below $125,000 for singles and $200,000 for couples.
The scheme extension comes with one caveat – it is only for new home constructions.
In another bonus for first-home buyers, they may also be eligible for the Federal Government’s $25,000 HomeBuilder cash grant for contracts signed before the end of the year if construction begins within three months.
“First home buyers are generally seen as being riskier by lenders so, in the broader market, do not usually qualify for the cheapest rates available,” Mozo’s Tom Godfrey told the Sydney Morning Herald.
Mr Mozo said first-home buyers do not generally qualify for special discounted interest rates but the FHLDS mortgages do come with an offset account which can be very handy when used as a debt reduction tool.