What Not to Do With Government Home Loan Schemes

Government support can make your first home loan far more achievable, but only if you line it up with your loan before you sign a contract.

The schemes sit across two levels of government, and they have different rules, price limits and timing. Here is how they fit together for Gold Coast buyers, and the mistakes worth dodging.

What Government Help Can Gold Coast First Home Buyers Get?

Eligible Gold Coast first home buyers can access a federal 5% deposit scheme, plus Queensland's First Home Owner Grant and transfer duty concessions. Each one has its own eligibility rules, so check them one by one.

The federal scheme is run by Housing Australia. The Queensland support covers a cash grant for new homes and reduced or nil transfer duty (stamp duty). Our first home buyers guide walks through the basics if you are just starting out.

How Does the 5% Deposit Scheme Work?

The 5% Deposit Scheme lets eligible first home buyers buy with a deposit of as little as 5% and skip Lenders Mortgage Insurance (LMI). Housing Australia guarantees up to 15% of the property's value, which is what makes the lower deposit possible.

The scheme is for owner occupied purchases only, so it does not suit investors.

The trade-off is a larger loan amount. A smaller deposit means higher repayments and less equity in the home at the start, which also makes it slower to build equity.

What Does a Smaller Deposit Do to Your Repayments?

A smaller deposit means a bigger loan, and a bigger loan means higher monthly repayments. The numbers below are illustrative only and use an example rate of 6.75% p.a.

Consider a buyer building a new home on the Gold Coast with a 5% deposit. Their loan amount is $600,000 on a 30 year principal and interest term. At 6.75% p.a., the repayment is about $3,892 a month.

The outcome is a sizeable monthly commitment, so it pays to confirm any grant eligibility first and decide how any extra funds are used. Our mortgage repayment calculator lets you test your own figures, and actual rates depend on your deposit size and lender.

Grant or Duty Concession: Does New or Established Change the Result?

It can. Whether a home is new or established can affect which grant or duty concession applies, and price limits apply to each.

Rules and amounts can change, so confirm the details with the Queensland Revenue Office before you rely on them.

Mistakes to Avoid When Using Government Schemes

The most costly mistakes are signing a contract before checking eligibility, ignoring the price caps, and assuming a scheme replaces proper loan planning.

• Signing first, checking later. Grants and concessions depend on contract dates, property type and eligibility. Check before you commit.
• Skipping pre-approval. A borrowing capacity calculator gives you a starting point, and home loan pre-approval tells you what a lender may actually offer.
• Ignoring the ongoing cost. A low deposit means a higher loan amount. Look at the repayment on both a variable rate and a fixed rate before you decide.
• Treating the scheme as the whole plan. The scheme helps with your deposit and LMI. You still need a loan with features that suit you, such as an offset account, and the right home loan structure.

An offset account can reduce the interest you pay, but some loans with offset features carry higher fees or rates. Compare the full cost, not just the headline rate.

Why a Broker Helps With the Timing

The federal scheme runs through participating lenders, so your choice of lender can affect whether you can use it. A broker can check the lender options and line up your pre-approval with the contract timing.

At digilend, we compare home loan options from banks and lenders across Australia and explain how each scheme fits your situation. If you are buying a new build, we can also point you towards our construction finance team.

Ready to find out which schemes you could use? Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions