OPINION: Why the solo parents home loans scheme is doomed to fail?

The Australian government has recently announced a budget approval for a program where single parents can take out their first home loans with just a 2 per cent deposit. 

While the program’s objective is well meaning, many experts believe that the program is inherently flawed and is doomed to fail.  

What is a Single Parent Family Home Guarantee (SPFHG)?

The Morrison government rolled out last year the Single Parent Family Home Guarantee (SPFHG) scheme with the aim of making home ownership more accessible and affordable to single parents who have not owned a property before. 

This scheme is open to eligible Australians who are single parents and are eyeing to buy or build this new house for a special deposit rate. With only 2 percent of the property or project’s cost, qualified applicants can re-enter or participate in the housing market.  

Typically, homeowners with less than 20 per cent deposit have to pay for the lenders mortgage insurance (LMI), but with this scheme, that barrier has now been waived.

OTHER NEWS: Home Loans News: ANZ Raises Interest Rate 

This scheme is managed by the National Housing Finance and Investment Corporation (NHFIC), which provides guarantee to up to 15% of the property cost that will be financed by an eligible applicant’s first home loan.

Can you get a home loan on single parent pension?

As the scheme’s extension, with additional 10,000 places that was made available last July 1, 2021, many remain skeptical of its effectiveness. 

In fact, a report from News.com.au noted that this scheme will not make first time homeowners’ home ownership much easier. In fact, this does not make home ownership for single parents more accessible, especially those who are living in major cities. 

As median housing prices and unit values skyrocketed in major cities over the past months, the scheme, in effect, was rendered useless. This is on top of the fact that the median salary for a woman employee in Australia is not enough to service a loan. 

How will it impace home loans in regional Australia?

In fact, the report noted, that the rate of increase in housing prices in key cities such as Canverra, Melbourne, and Perth exceeds the price cap stipulated by the scheme. 

We believe that everyone deserves the right to get into home ownership and have a sense of belonging. The price that is paid au threw not be out of service alone or worse losing the little equity that has been hard fought for can be devastating. so please thoroughly review before getting into the situation. 

—-

Are you looking at buying a property anytime soon? Talking to a seasoned broker will enable you to get the most competitive rate in the market. Start today by talking to our experienced brokers who are knowledgeable in different loan products, especially owner builder loans. Give us a call today at 1300 55 10 45 or send us a message to start your journey.

Darin Hindmarsh
Darin Hindmarsh

Share
Published by
Darin Hindmarsh

Recent Posts

AU’s Housing Market Remains Promising Amid Pandemic

By the end of this year, the country's housing sector is groomed for a promising…

3 years ago

Higher Housing Price Tag Awaits Aussie Homebuyers

While home loans rates and prices are starting to level down in most parts of…

3 years ago

Owner Builder Loans Guide: A Developer’s Perspective

Our 20-year experience with assisting clients with their owner builder loans needs enable us to…

3 years ago

How to Become a Mortgage Broker in Australia?

With thousands of people out of work because of the pandemic, many are becoming interested…

3 years ago

20 Years Of Providing Owner Builder Loans

Intellichoice Finance has been in the forefront in providing owner builder loans assistance to hundreds…

3 years ago

Home Loans News: ANZ Raises Interest Rate

Australia's ANZ raises its interest rate for all its long-term home loans, the most competitive…

3 years ago

This website uses cookies.