It’s crucial that those with lingering concern or criticism regarding the First Home Loan Deposit Scheme (FHLDS) remember who it's aimed at and what its purpose is, according to a broker with a client already approved through the initiative.
Anita Marshall, managing director of Advanced Finance Solutions, acknowledged the FHLDS is unlike previous grants made available and requires taking a “fine-tooth comb” to the online material to fully understand its application.
She said, “It’s not the easiest scheme to understand; it’s completely different from how an exemption from stamp duty or a $10,000 grant works, so it takes time to read and understand what you’re doing, but once you have your head around it, it’s actually a really great scheme.”
Thus far, there have been three predominant concerns voiced regarding the FHLDS: the long-term affordability of servicing the loan, the seemingly low price caps for properties, and the 10,000 participant limit.
According to Marshall, none are legitimate.
“The servicing myth is totally invalid. There’s no difference in the servicing for these types of loans as compared to any other normal home loan,” she said.
“Whether the borrower has a $100,000 deposit or a 5% deposit, the servicing is worked out the same. The client still has to qualify. They still have to show they’ve got the ability to make the payments at the normal assessment rates. This scheme is in no way designed to get around servicing.”
While also criticised, Marshall feels the property price caps help further address serviceability concerns for the target audience of the scheme.
“This scheme is designed for people who are not on really high incomes and are not trying to buy an expensive property,” she explained.
“These price caps are going to get someone into a nice first home that will be affordable for them, rather than allowing first home buyers to buy really expensive properties where they’re struggling to make the repayments.”
Advanced Finance Solutions has two locations: Port Stephens, NSW and Gold Coast, QLD. Marshall feels the price caps are appropriate in both areas.
“For cities, some of the caps are a bit more conservative but, once again, the client must be able to make their repayments. And, with the income level this scheme is aimed at, it’s important they don’t borrow too much,” she said.
“What first home buyers really need to be educated on is that it’s not always sensible to be going out and buying your forever dream home that’s going to put you into a difficult financial position where you’ve got no life outside of your mortgage. You don’t want to get yourself into a position where if interest rates go up, you’re struggling.”
Lastly, to those scoffing at the scope, Marshall again directed the focus back to the intended recipients of the initiative.
“The scheme isn’t for everybody. It’s aimed at people who are struggling to get their deposit together. Perhaps they’re paying rent or only just starting to save," she said.
"Some first home buyers have parents that are happy to be their guarantor. Others are able to save the full deposit. Not everybody needs the scheme, so I think the 10,000 participant limit is going to work well."
“Plus, the gates aren’t closed yet. There are still plenty of grants available. It’s not like on 2 January, there were 10,000 people waiting to put their submission in,” she added.
Ultimately, Marshall reminded, it's real people who are benefitting from the FHLDS. Her client, a teacher at a childcare centre, was able to meet all responsible lending criteria aside from her struggle to save a deposit. Now, she’s buying under the price cap for her area and is ecstatic at the opportunity.
“People will always try to find the negatives, especially when the government is involved. But I think this is a great scheme," Marshall concluded.