What to do after you’ve been approved for the First Home Loan Deposit Scheme

Congratulations! If you’re reading this blog, it’s likely you’re one of the lucky 10,000 first home buyers each financial year to be approved a spot under the First Home Loan Deposit Scheme. You’ve got pre-approval for finance, know how much money you roughly have to play with, all you have to do now is find a property before your cut-off. So, how do you take the next step?

Understanding your cut-off period

Once you’re approved for a place under the First Home Loan Deposit Scheme, you’re given a time period by your lender for how long that approval will last.

Traditionally, this cut off period is 90 days – but in light of the current COVID-19 situation, the National Housing Finance and Investment Corporation (NHFIC, the government body in charge of the scheme) has now given participating lenders the ability to extend successful applicants places by a further 90 days, provided you’re still eligible and satisfy the lender’s credit criteria.

This effectively gives you up to six-months to find a property.

How to start your property search

Before any search can begin, you need to know what it is you’re looking for first. The best way to do this is to ask yourself some basic questions like:

• Where do you want to live? What locations could you see yourself living?
• What type of property do you see yourself living in? Would you be happy in an apartment? Do you want something bigger, like a townhouse or house? How many bedrooms do you want? Do you need space for a growing family?

After you’ve answered these questions, you can broaden your horizons by interrogating your answers with extra questions like:

• Why am I drawn to this location? Can I feel the same way about other locations? Do other locations provide the similar attraction/amenity?
• Why have you chosen that property type? Would you consider other types of property if it could mean you could get onto the property ladder sooner? Will the property meet your needs for the time frame you’re looking to live in it?

Knowing the property price thresholds (and what you can afford)

Now you have a vision of what you think your first home looks like, you’re in a much better position to try and find it. But before you start to hunt, you need to check back on your limits.

The aim of the First Home Loan Deposit Scheme is to help eligible first home buyers with the purchase of a “modest” size home, so the NHFIC sets thresholds that’ll keep your spending in check. The price caps for capital cities, large regional centres and regional areas are:

So, when you’re starting to look for property, you’ll need to remember that the value of the home must not exceed the relevant price cap for the area in which it is located (if you intend to keep your spot in the Scheme, that is).

The other number you’ll need to consider is how much your lender has given you pre-approval for. This is how much money the bank thinks you’ll be able to repay and that they’re likely prepared to lend you – so you’ll need to keep within this limit if you want to avoid having to find additional funds elsewhere to pay for the amount you go over.

Keep your options open

Many first home buyers will start their property search in the traditional places – online via real estate websites or maybe by visiting some display suites. However, while these are definitely great places to look, it’s worth noting that they’re also not representing the entire property market.

There are many properties out there that are sold before the masses even know they are available, and it’s these “pre-release” and “off-market” properties that often provide great opportunity for those in the know.

At First Things First, we’ve developed great relationships with some of the best developers in the market to get access to stock we think first home buyers will love, that few others know about. These relationships we’ve built also mean we’re in a great position to negotiate deals on your behalf that you’d likely not be able to get on your own. Because our mission is to get you into your first home and we’ll leave no stone unturned to try and make this happen. Speak to us about how we can help your property search today!