Saving for a deposit is the the number one impediment for first home buyers when it comes to getting into the property market. Home ownership rates for young people are in sharp decline. Approximately one in three people under the age of 35 own their own home. This compares to around 83 per cent of people aged over 65.
So the Federal Government's new Deposit Scheme is welcome news to the thousands of first home buyers looking to get into the property market. The Government has just announced new legislation that gives First Home Buyers new access to a Deposit Scheme. Low and middle income earners will now be able to purchase property with as little as 5 per cent deposit.
"It can take ten years for the average first home buyer to save a 20 per cent deposit" Treasurer Josh Frydenberg said in a statement.
The Scheme is limited to 10,000 loans each financial year, starting from 1 January 2020. Eligibility for the scheme will be means tested with taxable incomes up to $125,000 per annum for singles and up to $200,000 per annum for couples. If the scheme quota is filled quickly as expected, then there will be pressure on the Government to open up another round one before January 1, 2021.
There will also be a limit on property values:
- Sydney properties worth up to $700,000
- Country NSW - $450,000
- Melbourne properties worth up to $600,000
- Country Victoria - $375,000
- Brisbane - $475,000
- Country QLD - $400,000
- Perth - $400,000
- Country WA $300,000
- Adelaide - $400,000
- Country SA - $250,000
- Hobart - $400,000
- Country TAS - $300,000
- ACT - $500,000
- NT - $375,000
Price thresholds for capital cities will also apply to large regional centers with populations over 250,000. Only two of the big four banks will be chosen to take part in the scheme, with the small lenders taking up the other 50 per cent of all guarantees.
Please contact us for further information or to check your eligibility.