The remaining 7,000 spots left in the initial round of the government's first home loan desposit scheme (FHLDS) will be made available from 1 February 2020 and allocated on a first come, first served basis.
Major banks CBA and NAB claimed the other 3,000 loans under the scheme since its origination. However, according to Mortgage Choice CEO Susan Mitchell, "so little information was available" leading up to the initial launch date that some borrowers hoping to apply may have missed their chance.
Further, it seemed to Mitchell that just one lender had the systems in place to be able to go live on 1 January, which meant "first time buyers who wanted to apply had to have all their paperwork in order, or miss out".
The Mortgage Choice Property Ownership Survey showed 46% of first home buyers surveyed were unsure if they were eligible to apply, 35% did not know how to apply and 47% would not know where to find information about the scheme.
“Buyers have a timeframe of 10 days to meet conditional approval once they are granted a place in the scheme. However, if they do not complete their application within this time, they will lose their spot and it will go to the next person on the waiting list. And, once the loan is approved, you have a period of 90 days to return a signed and dated contract of sale to the lender," Mitchell said.
As such, it is crucial borrowers hoping to be one of the 7,000 have their paperwork ready and meticulously completed. The Mortgage Choice CEO also highlighted that participation in the scheme requires applicants to have a "clear idea of their long-term goals".
“A change in circumstances could come at a significant financial cost," she explained.
"The major benefit of the scheme is that buyers can take out a low deposit home loan without incurring the cost of Lenders’ Mortgage Insurance, however, should they decide to move out, refinance, top up the loan they could face paying LMI.
“Furthermore, those who buy a home using the scheme, will need to make a commitment to live in the property as they cannot change the terms of the loan," she added.
With the remaining 7,000 places to open up at the end of the week, Mitchell has urged first home buyers hoping to apply to seek out an experienced mortgage broker to get the paperwork in order for a successful application.
A further 10,000 guaranteed loans will be made available from 1 July 2020.