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What does the new 2020-21 Federal Budget mean for home buyers?

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Well, it’s good news if you are a future first home buyer!

It is clear with the new budget that the Government’s focus is squarely on driving an economic recovery in the wake of the pandemic. Recovering from the recession has overtaken any objectives relating to ‘budget repair’ or achieving a budget surplus.

As part of their efforts to stimulate the economy, the Australian Government has committed additional places for the First Home Loan Deposit Scheme (FHLDS) in the 2020-21 financial year, specifically for eligible first home buyers purchasing or building new homes.

Last weekend they announced that the First Home Loan Deposit Scheme will be extended with another 10,000 new places allocated for new homes until 30 June 2021.

The First Home Loan Deposit Scheme is an Australian Government initiative to support eligible first home buyers purchase their first home sooner.

When originally launched in January 2020, the Scheme was extremely popular and the original 10,000 places went extremely quickly. So, it’s great news for those still looking to purchase their first home with another 10,000 places up for grabs.

Usually first home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance, however under the Scheme they are exempt which can potentially save thousands of dollars.

Under the Scheme, eligible first home buyers can purchase or build a new home with a deposit as little as 5 per cent (lenders criteria also apply), which alleviates the hurdle of saving for a significant initial down payment.

This is because National Housing Finance and Investment Corporation (NHFIC) guarantees to a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible first home buyer’s home loan.

Another exciting headline in the new budget is the early commencement of Stage 2 of the personal income tax cuts, which will be backdated to 1 July 2020. This means those employed will have the opportunity to save more of their income and put it towards a home deposit.

For more information on First Home Loan Deposit Scheme visit the Australian Government’s NHFIC website.

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