To get approved for the First Home Loan Deposit Scheme.
Loan amount
$570,000 (95% of the property value)
Security
Owner-occupied property
LVR and term
95% LVR, 30-year loan term.
Deposit
$21,000 gifted deposit.
Income
$115,000.
The problem
The gifted deposit was not accepted as genuine savings under the scheme.
Solution
Use rent as genuine savings.
A first home buyer’s plight
Saving a large deposit is one of the biggest challenges that first home buyers face in Australia.
The First Home Loan Deposit Scheme that came into effect in Australia from 1 January 2020 allows low and middle income first home buyers with only a 5% deposit purchase a modest first home without paying tens of thousands in Lenders Mortgage Insurance (LMI) fees.
However, just meeting the eligibility for the 5% home deposit Scheme is not enough as each participating lender will also assess you as a borrower and they will reject your application if it does not fit into their cookie-cutter eligibility requirement.
And this is what happened to Ben!
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Ben was an eager first home buyer looking to take full advantage of 5% home deposit scheme.
He knew that he needed at least a 5% deposit to qualify for the scheme – which he did not have yet.
Fortunately, his brother Troy was happy to gift him the money.
After going through the Scheme eligibility requriements, he knew he met all of them.
Then, Ben approached his local Commonwealth Bank of Australia (CBA) branch where he was an existing customer to apply for the 5% home deposit Scheme.
It made sense since CBA was one of the participating lenders under the Scheme.
Unfortunately, CBA knocked him down, and Ben was left wondering why.
All hope is not lost
Feeling hopeful that a mortgage broker might be able to help him with his predicament, Ben called Home Loan Experts to enquire about the possibility of getting approved for the first home buyer scheme.
He was connected to Amine Berrada, a mortgage broker with a knack for understanding how banks view home loan applications, having worked for many years in one of the major banks himself.
Talking with Ben, Amine was quick to establish that he fulfilled all the criteria for the scheme sans one!
Ben fulfilled all the criteria for the First Home Loan Deposit Scheme, namely;
He is an Australian citizen (not a Permanent Resident).
He is a first home buyer.
He is buying an owner-occupied property, i.e. a place to live in.
He is earning an annual income of $115,000, which is below the $125,000 p.a threshold.
He had his Notice of Assessment(NOA) for 2017 – 2018 which is required to verify said income.
Ben had been making timely monthly payments on his rent since September 2018.
Furthermore, Amine did a full assessment of Ben, from checking his credit score to doing a serviceability calculation to improve his chances of pre-approval.
Ben had an excellent credit score of 899 and his debt-to-income (DTI) ratio was 4.99 (which is less than a high-risk DTI of 6).
Amine personally met with Ben to sign the required documents so that he could re-apply for the scheme.
CBA conditionally approved Ben’s application on 13 January 2020 for a $570,000 mortgage at an interest of 3.32% p.a.
Ben signed the First Home Buyer Declaration for the scheme on 14 January 2020 and got a reservation on 20 January 2020.
With a pre-approval from both the scheme and a participating lender, Ben now has up to 90 days to find an eligible property under the 5 per cent government guaranteed home loan deposit scheme.
A quick pre-approval
Things may not always be as straightforward as they seem, especially when lenders have strict criteria to qualify for a home loan.
That’s why it’s convenient to use a mortgage broker who can use his experience to make you an attractive borrower for a higher chance of approval.
And that’s exactly what Amine did for Ben.
Ben was pleasantly surprised as to how quick Amine worked to help him qualify for the scheme.
We’re here to help
As of 10 January 2020, 190 participants have already been pre-approved for the First Home Loan Deposit Scheme.
Do you want to get approved for the 5% home deposit scheme?
Call us at 1300 889 743 or fill in our free assessment form, and we can help you realize your dream of home ownership.
“ ...From the beginning the service, care and attention to my needs was outstanding.
And that continued with every contact, in fact I'd say it got better, which is counter
to what happens almost everywhere else....”
Glen C
“ ...He was able to quickly and with minimal fuss, find us a loan at a good rate when others told us it would be too hard. Very impressed with their service and would highly recommend the home loan experts in the future”
Kim T
“ ...offered fast service and made the whole refinance process simple. And I love simple!
Thank you for getting me a great deal with a home loan that really suited my needs....”
Tracey A
“ ...absolutely outstanding!!!! I would give more than 5 stars if I could. My partner and I cannot speak highly enough of him. Our situation is quite a difficult one and this is our first time buying a home, but nothing was too difficult....”
Elysia T
“ ...provided an excellent service that included very quick turnaround in getting our applications processed and providing guidance and valuable advice in trying to secure a home loan for us.....”
Chavi U
“ ...made the application and settlement process incredibly easy and stress-free. They provided very clear information and responded to any queries quickly. They were very transparent about all aspects of the process.”