If you’re a first home buyer looking to get into the property market, you may have heard about the First Home Loan Deposit Scheme (FHLDS). This government initiative aims to help eligible first home buyers purchase their first home sooner by reducing the amount of deposit required.
- Reduced Deposit Requirement
The biggest benefit of the FHLDS is that it reduces the amount of deposit required to purchase a home. Under the scheme, eligible first home buyers can purchase a home with as little as a 5% deposit This means that first home buyers can get into the property market sooner, without having to save up a large deposit.
- No Lenders Mortgage Insurance (LMI)
When you have a deposit of less than 20%, lenders usually require you to pay Lenders Mortgage Insurance (LMI). This is an insurance policy that protects the lender in case you default on your loan. LMI can be expensive, and it’s usually added to your loan amount, which means you’ll end up paying interest on it over the life of your loan.
- More Affordable Repayments
With a smaller deposit, your loan amount will be larger, and this can mean higher repayments. However, because the FHLDS allows you to purchase a home with a smaller deposit, your loan amount will be smaller, which can mean more affordable repayments.
- More Options for First Home Buyers
With a smaller deposit, first home buyers may be able to purchase a home in a more desirable location, or a larger or newer home than they would have been able to afford otherwise.