Potential assistance available to people receiving a DSP (and others on a low income) includes:
Low-deposit home loan options
There are lenders who offer home loans to people with a deposit of only 5% of the property value, but there are no disability pension home loans specifically. Low-deposit home loans mean you’re able to borrow up to 95% of the value of the property. However, these low-deposit home loans are not as common as conventional loans requiring the normal 20% deposit and may come with stricter lending criteria, such as a very good credit score or a requirement to pay Lenders Mortgage Insurance. They may also come with a slightly higher interest rate.
What is Lenders Mortgage Insurance (LMI)?
LMI is an insurance premium that borrowers pay to insure the lender against the higher risk posed by a low deposit (which is defined as a deposit of less than 20% of the agreed value of the property to be purchased). The amount of LMI you’re required to pay is dependent on the value of the property you want to buy, but can amount to thousands of dollars. Several first homeowner schemes aim to help people having to pay LMI.
Assistance for first homebuyers
The First Home Owners Grant (FHOG) is a national scheme for first-time buyers which is administered by the states, so it varies depending on where you live. It comes in the form of either concessions for stamp duty (also known as transfer duty) or a lump sum payment (typically either $10,000 or $15,000) which can be used as part of a deposit or can be put towards the cost of stamp duty. Check with your state government for details of first home owner assistance which may be available in your state.
First Home Loan Deposit Scheme
This is an Australian Government scheme which assists first homebuyers by guaranteeing up to 15% of the deposit on your home, meaning you only have to find an additional 5% deposit. It isn’t a cash grant or a deposit: it means the government effectively acts as a guarantor for up to 15% of the value of your home deposit so that you don’t have to pay LMI. This scheme has a quota of a limited number of places per year, so you’ll need to check whether there are any spaces available when you are ready to apply.