The new financial year has kicked off with a bang for first home buyers! A whopping 45,000 more places have opened up for them under the Home Guarantee Scheme, as well as 5,000 more spots for single parents. Here’s how it could help you buy a home sooner.

Home ownership has long been the great Australian dream, but high property prices are making it tough to save a 20% deposit for many young families.

That’s where the federal government’s Home Guarantee Scheme (HGS) comes in.

It gives first home buyers a leg up into the property market even if they have just a 5% deposit, and it’s proving to be very popular.

In fact, it’s helped more than 160,000 Australians buy or build their own home since the scheme launched four years ago.

Places in the HGS are capped each year, but the good news is that an extra 50,000 spots have just been announced for the 2024-25 financial year.

Not sure what the scheme is about?

Let’s take a closer look at what’s involved by answering a few FAQs.

What is the Home Guarantee Scheme?

The HGS helps first home buyers and single parents buy a place of their own even when they have a small deposit.

Essentially, the government acts as a guarantor for the home buyer’s loan, so there is no need to pay lenders mortgage insurance, which can be a big saving on upfront costs.

In fact, not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

Who does the scheme help?

The HGS covers three separate programs, each with a different type of home buyer in mind.

The First Home Guarantee helps eligible first home buyers get into the market with as little as a 5% deposit. From 1 July 2024, an extra 35,000 places became available.

The Regional First Home Buyer Guarantee is dedicated to helping first home buyers who live in regional areas buy a home with just a 5% deposit. An extra 10,000 places have opened up for the 2024-25 financial year.

The Family Home Guarantee supports eligible single parents to buy a home with as little as a 2% deposit. This will help up to 5,000 families this financial year.

Am I eligible for the Home Guarantee Scheme?

You’ll need to tick a few boxes to be eligible for the HGS.

In particular, there are limits around the maximum purchase price for a home under the scheme. The upper limits vary between cities and across regional areas from state to state, and are adjusted each financial year.

One way to find out if you’re eligible is to call us and we can walk you through the various requirements.

Do all banks support the Home Guarantee Scheme?

No. Lenders choose to be part of the HGS, and while there is a reasonably wide choice of banks to pick from, not all lenders have signed up.

The Real Estate Institute of Australia says the “best way to see if you can qualify for the scheme and seek pre-approval is to speak with a mortgage broker”.

To date, mortgage brokers have secured up to 80% of the HGS placements, and we can guide you through the application process, answer any questions you may have about buying a first home, and recommend a home loan option suited to your needs from the lenders that are part of the scheme.

Call us today to find out more about buying with a 5% deposit – and zero lenders mortgage insurance. You could be in your own home a lot sooner than you expected!

Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au

Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.

About the Author:

Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.

Connect with Louisa on Linkedin.

Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Good News for First Home Buyers: Saving for a Deposit Got Faster

Home loan headlines have been a bit of a downer lately, but the good news is that first-home buyers are now reaching their 20% deposit goal faster.

First home buyers have been delivered well-deserved good news with the findings of the 2023 Domain First Home Buyer Report. The analysis shows that first-home buyers aged between 25 and 34 are hitting their house deposit savings goal more quickly compared to 2022 – a month before the first ten consecutive cash rate hikes.

State by State Breakdown

Sydney experienced the biggest decline – a 17-month drop in average deposit-saving time frames, with it now taking 6 years and 8 months to save a deposit compared to 7 years and 1 month in April 2022.

Brisbane (now an average of 4 years to save a deposit) and Canberra (now 6 years) came in second, both experiencing a 14 month drop.

Melbourne (now 5 years and 7 months) and Darwin (now 3 years and 6 months) came next, both with an 11 month decrease in saving periods.

Hobart (now 5 years and 8 months), Perth (3 years and 7 months) and Adelaide (4 years and 9 months) all saw smaller drops of 5 months, 2 months and 1 month respectively.

Why Is It Quicker to Save for a Deposit Now?

2022 saw a steady decline in national house prices in response to increasing interest rates. In January 2023, CoreLogic reported a record national home value decline of 8.40%. And as property priced fall, so too does the cost of a 20% deposit.

Also contributing to the shorter savings periods is ABS data showing that wages have grown in both public and private sectors, while the unemployment rate is hovering at a low 3.5%. Rate hikes meanwhile have seen savings accounts accrue more interest.

Overcoming Potential Challenges

Despite the promising new CoreLogic findings, saving a 20% deposit can still be a stretch for many.

The increased cost of living means just paying for essentials takes a big chunk of the pay check, leaving less for savings. And with home loan interest rates on the increase, borrowing capacity has dropped and mortgage serviceability can be difficult.

CoreLogic has reported that house prices have begun to stabilise, so as a first-home buyer, how can you speed up the buying process?

Get in on Government Incentives

Taking advantage of government schemes can speed up the home-buying journey by, on average, 4 to 4.5 years.

For example, the First Home Guarantee could see you paying a deposit of just 5% while avoiding an eye-watering lenders’ mortgage insurance fee. But you will have to be quick because spots are limited and can disappear quickly. The next allocation period in July is creeping up, so getting on board with a mortgage broker (like us!) as soon as possible is a good idea.

We have the know-how to get your First Home Guarantee application on track, and we can see if you are eligible to maximise your savings by combining other government incentives.

How has the time required to save for a 20% deposit changed for first-home buyers?

According to the 2023 Domain First Home Buyer Report, first-home buyers aged between 25 and 34 are now reaching their 20% deposit goal faster compared to 2022. The time required to save for a deposit has decreased in cities like Sydney, Brisbane, and Canberra.

What factors have contributed to the quicker savings for a home deposit?

Several factors have contributed to this trend. First, there has been a decline in national house prices, reducing the cost of a 20% deposit. Second, wages have grown in both public and private sectors, and the unemployment rate is low. Lastly, rate hikes have led to savings accounts accruing more interest.

Are there any challenges that first-home buyers should be aware of?

Despite the positive trends, saving a 20% deposit can still be challenging due to the increased cost of living and rising home loan interest rates. These factors can affect borrowing capacity and mortgage serviceability.

How can government incentives help first-home buyers?

Government incentives like the First Home Guarantee can significantly help by allowing buyers to pay a deposit of just 5% while avoiding lenders’ mortgage insurance fees. However, spots for these incentives are limited and can fill up quickly.

How can Zippy Financial assist me in buying my first home?

Zippy Financial can help you understand your borrowing power, assess your finance options, and assist in taking advantage of government incentives to make the home-buying process easier.

Find Out More

If you are ready to take the plunge and buy your first home, we can help you get a plan in place to make it happen. We will calculate your borrowing power, asses your finance options, and assist in taking advantage of government incentives.

Call us today!

Phone: 1300 855 022

Email: clientservices@zippyfinancial.com.au