2% home deposit scheme finds support, but is it a good idea?
Announced on Saturday, the ‘Family Home Guarantee’ allows single parents to buy a home with as little as a 2% deposit.
From 1 July 2021, 10,000 spots will be allocated to this scheme over four financial years, providing single parents with the ability to build or buy a home with a deposit of 2% (a 98% loan-to-value ratio).
Eligible participants can either be a first home buyer or a previous owner-occupier, and the maximum annual income cap is $125,000.
The Government estimates around 125,000 single parents with dependents could be eligible, with 84% of them single mums.
It is yet to be confirmed if borrowers in this scheme will have to pay lenders mortgage insurance (LMI), which is not the case with the First Home Loan Deposit Scheme.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
Smart Booster Home Loan
Product Features
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments:
$1,476
Advertised
Rate (p.a.)
1.99%
Comparison
Rate (p.a.)
2.47%
Product Features
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR
How did the major banks respond to the Family Home Guarantee?
The scheme has found support among big banks.
“This announcement will come as a welcome relief for hard working single parents, particularly those working in essential services such as education, health care and public safety, looking to buy their first home or re-enter the property market,” CommBank chief Matt Comyn said.
NAB also backed the latest measures.
“We’re excited by the new initiative for single parents, recognising that buying a home is often a major challenge for Australians on a single income,” NAB executive Rachel Slade said.
“We expect the Family Home Guarantee will provide hope and build confidence for single parents to enter, or in some cases re-enter, the property market.”
Housing groups supportive too
Housing industry lobbying groups, such as Housing Industry Australia (HIA) were supportive of this new scheme too.
“While many people can service a mortgage, saving the extra money each week to build up a deposit is simply too hard. This scheme will meet a real need and support thousands of families gain the security that comes with a home,” HIA managing director Graham Wolfe said.
Master Builders Australia chief Denita Wawn had a similar response.
“Every $1 spent building new housing delivers $3 in benefits to the wider economy, so this undoubtedly good news for the whole community,” she said.
“Overcoming the deposit gap is the greatest barrier to home ownership and these measures will be life-changing for so many people.
“The new Family Home Guarantee will be a revolution in providing single custodial parents, the overwhelming majority of whom are women, with a step up to gaining the…
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