Thousands of first home buyers have rushed to the First Home Loan Deposit Scheme to help them get into the property market sooner.
The Commonwealth Bank and National Australia Bank – the only two big banks to be part of the scheme – have been inundated with applications since they opened on January 1.
News Corp has been told the first 3000 available positions have been filled, however these applications can drop off depending on whether the applicant follows through with getting conditional approval and buying a property.
Between the two big banks they can only give the green light to 3000 successful applicants this month, before another 2000 spots become available by them from February 1.
And from next month another 5000 applications can also be accepted by any of the other 25 lenders who are part of the scheme.
The Minister for Housing and Assistant Treasurer Michael Sukkar said it was “great to see such strong interest” in the scheme but “it is important to remember this is only the beginning”.
Mr Sukkar said the majority of applicants had been single buyers with a median income of $68,900.
The Commonwealth Bank’s home loan lending specialist Parisa Mardeen said many entry-level buyers had flocked to sign up.
“I have had conversations with customers who said that they had plans to buy within the next five to 10 years but with this initiative they will be able to secure something much faster,” she said.
The scheme allows borrowers to front up with just a five per cent deposit saved up and the government will act as a guarantor for the remaining 15 per cent.
This means borrowers don’t have to pay the expensive lenders’ mortgage insurance (LMI) – a charge that protects the lender not the borrower if there is a default on the loan.
Mechanical engineer Mohammad Kashif Rahman, 36, has stashed away about a 10 per cent deposit and hopes to buy land and build up to about $550,000 in Sydney’s southwest.
“I’ve been looking for a property for about four to five years and it’s always been hard to save a deposit with rising house prices,” he said.
“I’ve found a small block of land and the plan is to build a house on it straight away.”
He said he would have had to wait at least another five years to save a 20 per cent deposit.
Once applicants are successful they have 10 days to get pre-approved finance from an applicable lender to purchase property and they must then go through settlement within three months.
Single applicants cannot have a taxable income of more than $125,000 while for couples their income cannot exceed $200,000.