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The broker channel is playing a pivotal role in helping first home buyers understand and access the Home Guarantee Scheme, including ensuring they get maximum value from their lenders.
Housing Australia’s Home Guarantee Scheme Trends & Insights Report 2023–24 reported that a third of all first-home buyers who bought in FY2023-24 made use of the federal government’s Home Guarantee Scheme.
Though borrowers can apply through other channels, Housing Australia has confirmed 78% of all loans originated under the Home Guarantee Scheme during the period went through brokers.
Blue Owl Finance director Aidan Hartley (pictured above) said the vast majority of first-home buyers who did not have a 20% deposit were now looking into the scheme due to the huge cost savings it could offer them.
Hartley expects it to continue to play a critical role for certain first home buyers in the current market.
“It’s huge, when we can help quarter the deposit required – down from 20% deposit to just 5% deposit – and we can also quarter the time it takes to save that deposit,” Hartley said.
“With rents as high as they are, many would-be first-home buyers’ savings have stagnated, so reducing the barrier to entry has been a big relief; many are able to get onto the ladder sooner.”
Blue Owl Finance launched with a focus on assisting first home buyers, though Hartley has seen that initial focus broaden as past clients return to the business to use their equity as upgraders.
Hartley said he understood just how important brokers were to first-home buyer clients accessing the Home Guarantee Scheme, including the role they played educating customers about its advantages.
“Many first home buyers may be aware it will save them thousands on Lender’s Mortgage Insurance (LMI), however what they don’t know is that it also saves you on interest and your repayments, because many banks will also offer you interest rates as if you had the 20% deposit.”
Hartley said brokers were also saving clients dollars when it came to offering product options.
“Different banks have different policies around genuine savings, the amount they are prepared to give to you, and of course vastly differing interest rates,” he said.
Those borrowers who do not go through the broker channel and have no knowledge of the scheme when they apply for a loan, also may end up paying more than they need to through a lender.
“If you walk into a bank that is not part of the Home Guarantee Scheme, they won’t turn you away, you’ll just end up paying the LMI, and you may be none the wiser,” Hartley said.
“Brokers work for the borrower’s best interests and finding them the best solution. I love saving my clients tens of thousands on bank fees; it’s one of the biggest value-adds I can give.”
Eligibility is the starting point for access to the scheme. Hartley said it was primarily useful for “low- to middle-income earners buying low- to medium-value homes “, which could make it restrictive.
“Anyone on a high income – above $125,000 for singles, or $200,000 for a couple – or buying above certain price thresholds, will not be eligible for the scheme,” Hartley said.
For these higher income buyers who do miss out on access to the scheme, the choices include either paying LMI fees, using a guarantor, or to just “keep on saving”, he said.
Borrowers who can access the scheme are finding they get more than good loans from brokers.
“Many buyers, particularly first-home buyers, don’t consider the typical five-day cooling off period – the bank’s turnaround time on the scheme is important, as some take weeks to approve the loan.” .
“Brokers have a full visual of each bank’s processing times, which is arguably as important as the interest rate itself.”
Hartley said the Home Guarantee Scheme would remain important for first-home buyer clients wanting to break into the market.
“Prices are only going one way of late, so it allows buyers to get in sooner, rather than chasing the market for years,” he said.
