For context, the national averages* for the time it takes an average-income couple to save a 20% home deposit, is 4.6 years for a median-priced house; or 4.2 years for a median-priced apartment.
If legislated, the FHLDS will help eligible first home buyers purchase a home with a deposit as low as 5%, by guaranteeing any shortfall in the 20% deposit that most lending institutions require for a home loan.
This means that eligible first home buyers will also avoid Lender's Mortgage Insurance, which on average can be around $10,000 (this can vary depending upon the loan to value ratio and the amount borrowed).
Below are some of the preliminary details that have been released. Basically, the FHLDS will :
Lastly, it's important to understand that the FHLDS is still only a proposed measure, and legislation needs to be passed to make it effective; also, changes could be made to it, or it may be rejected.
If legislated, the FHLDS may be of benefit in this respect. However, it's important not just to consider the short-term gain that it intends to offer for eligible first home buyers.
For example, assuming a 5.5% interest rate, weekly repayment frequency and 30-year home loan term, the long-term implications of buying a $571,000 residential property with differing home deposits are as follows: