First Home Loan Deposit Scheme (FHLDS)

First Home Loan Deposit Scheme (FHLDS)

Have you heard about the First Home Loan Deposit Scheme (FHLDS) andmortgage brokers perth wondering how you can get a piece of that action? Or perhaps you’re struggling with information overload for first time home buyers and you just want a couple of straight answers about if you are eligible to apply.

In this guide you’ll only get straight answers about the FHLDS and written in plain English. You can thank us later!


The evolving COVID-19 crisis has taken the world by surprise. As a first home buyer with a pre-approved FHLDS application, you might be  stressing about how your eligibility is impacted.

At Morgan Finance WA, we can help you secure a 90-day extension if you are in the pre-approval phase and have at least a week to go before the expiry date. Get in touch today to get this started!

Under normal circumstances, you would have to find a property and enter a contract of sale within 90 days of receiving conditional approval for FHLDS.

Due to social distancing measures and bans on public auctions, the Government has allowed for a 90-day extension to this clause. The extension may not automatically apply to you though. It’s up to each lender to decide if they will offer this extension to their applicants!

Lenders we know are currently offering the extension as of April 4th, 2020:

We can reach out to your bank on your behalf and see if they are offering the extension. It pays to make sure you’re in the clear!

Note: some banks may not approve the extension if you are only a few days away from the expiration day of their pre-approval offer. Get in touch today to make sure you don’t miss any deadlines.

What is the First Home Loan Deposit Scheme?

 The Australian government introduced the First Home Loan Deposit Scheme to help people enter the property market more easily. It’s not a grant. The Government won’t give you money to help you save up your initial deposit.

Instead, the FHLDS helps you save thousands of dollars and start your home loan application with a deposit as little as 5%.

It all comes down to bypassing the Lender’s Mortgage Insurance that is usually charged for any loan with a deposit of less than 20%.


With the FHLDS, the Government is guaranteeing 10,000 low-deposit loans each year, from January 1st 2020. Participating banks and lending institutions are guaranteeing that they won’t charge LMI nor will they increase their home loan interest rates for FHLDS applicants.

Am I Eligible for FHLDS? Can I buy a home with 5% deposit too?

This scheme is mainly for low to middle income earners who are Australian citizens.


To be eligible for the FHLDS you must meet these criteria:

  • Australian citizen (permanent residents are not eligible)
  • At least 18 years of age
  • Income test for singles and couples
  • MUST be a first home buyer
  • You intend to live in the property (it can’t be for investment)
  • If applying as a couple you must be married or de-facto
  • You have 5% deposit saved


Eligibility Checklist for Singles:
Eligibility Checklist for Couples:


How to Apply for the FHLDS

At Morgan Finance WA, we can help you with every step of the application. We can also help you see if you’re eligible and also to choose which lender is the best to go with. We know how hard it can be to decide which lender is the right one for you!

On the other hand, you can also apply directly at a bank or lending institution that is an FHLDS participating lender. There are currently 27 lenders which offer guarantees under the Scheme (including a guarantee that they won’t charge higher interest rates for FHLDS home buyers).Cheapest Home loans Kardinya



First Home Loan Deposit Scheme Banks & Lenders


Major Bank Lenders

  • Commonwealth Bank of Australia
  • National Australia Bank


Smaller Lenders

  • Australian Military Bank
  • Auswide Bank
  • Bank Australia
  • Bank First
  • Bank of us
  • Bendigo Bank
  • Beyond Bank Australia
  • Community First Credit Union
  • CUA
  • Defence Bank
  • Gateway Bank
  • G&C Mutual Bank
  • Indigenous Business Australia
  • Mortgageport
  • MyState Bank
  • People’s Choice Credit Union
  • Police Bank (including the Border Bank and Bank of Heritage Isle)
  • P&N Bank
  • Queensland Country Credit Union
  • Regional Australia Bank
  • Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)
  • Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
  • The Mutual Bank
  • WAW Credit Union


Start your FHLDS application today

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Get in touch with our experienced team at Morgan Finance WA to start your FHLDS application today!


Banking Royal Commission & Mortgage Brokers

The Banking Royal Commission and Mortgage Brokers

New Business Loans MurdochThe findings of the Banking Royal Commission, conducted by Commissioner Hayne, were made public on 4th February 2019. The report contains 76 recommendations, 5 of which are directly in relation to mortgage broking.

In particular, the Commission recommended that “trailing” commissions paid to Mortgage Brokers by Banks (and other lenders) should first be prohibited, and after 2 to 3 years all commissions should be prohibited (including Upfront commissions). Further it was recommended that commissions be replaced with “fees for service” paid by borrowers.

The Commission argued that the practice of commissions being paid by Banks and lenders to Mortgage Brokers creates a conflict of interest as brokers are incentivized to write as many loans as possible, rather than to act in the best interest of the Borrower. The Commission argued that a focus on volume leads to dishonest (“cowboy”) conduct.

Mortgage Brokers in Australia

The great majority of Mortgage Brokers are small businesses or contractors who earn all their income from commissions paid by lenders. A small number of Mortgage Brokers are owned by Banks or lenders – Aussie Home Loans is owned by the CBA for example. There are some 16,000 brokers in Australia who collectively employ over 27,000 people.

How commissions work for mortgage brokers

There are 2 types of commission paid by lenders to Mortgage Brokers – Upfront and Trail. Commission arrangements vary between lenders, and there may be individual arrangements (such as bonuses) with specific lenders or brokers.

Upfront commission

An Upfront commission is a one-time fee, paid a month after a loan is settled by the lender.

Upfront commissions are calculated taking into account various factors such as the loan amount and the net amount from funds in an offset account. Some lenders did once offer a volume based commission however those arrangements are no longer available, commission can be affected by the overall quality of loans submitted  by the Mortgage Broker the commission paid can be affected by the level of arrears and defaults by the clients.

Upfront commission is usually in the range of 0.65% to 0.7% (+GST) multiplied by the loan amount.

For example, the Upfront commission on a home loan for $250,000 at a commission rate of 0.65% is $1,625.

Trail commission

Trail commission is a fee paid monthly for the life of the loan (once settled).

The Trail commission is usually in the range of 0.15% to 0.275% (+GST) per annum multiplied by the outstanding loan amount.

For example, the monthly Trail commission on a home loan for $250,000 at a commission rate of 0.15% per annum is $31.25 per month.

Factors affecting commissions

Several factors affect the ongoing payment of commissions;

  • If a loan is fully repaid early (ie before the contracted loan term) the Trail commission is no longer paid.
    In addition, if early repayment occurs within 12 months of settlement, the Upfront commission is “clawed back” by the lender (ie it is repaid by the broker to the lender).
    If repayment occurs between 12 and 24 months, 50% of the Upfront commission is clawed back.
    In some cases a further 25% may be clawed back in the third year.
  • If a loan goes into arrears or default the Trail commission is no longer paid and the Upfront commission will be clawed back as described above.
  • The Trail commission falls with the loan principal.

Also note that on average home loans are repaid or refinanced in 7 years, so the Trail commission on a loan will cease on average in 7 years.

Do borrowers pay any fees or commissions?

Generally Borrowers don’t pay any fees or commissions to Mortgage Brokers. In some instances however a fee may be charged, for example;

  • Complex situations (which require additional time and effort)
  • Small value loans, typically under $300,000 (where commissions are very low)
  • Commercial or business loans (which require additional time and effort)
  • Loans that repaid or refinanced within 2 years

Why are commissions paid?

Upfront commissions compensate Mortgage Brokers for the work required to establish a home loan by;

  • Understanding and assessing the Borrower’s personal circumstances
  • Reviewing the available alternatives – there are literally hundreds of home loans types and variations available from numerous lenders
  • Preparing application documentation and collating supporting materials
  • Answering lender questions and requests for further information

Trail commissions recognise that a Mortgage Broker will monitor the loan for its ongoing suitability and whether better alternatives may have arisen. Many brokers will conduct an annual financial health check at no cost to the borrower.

Mortgage Brokers also incur substantial indirect costs service such as administration and loan processing costs, licensing, compliance costs, professional insurance, ongoing education and office costs.

Are Mortgage Brokers conflicted?

Best Mortgage Broker near meThere are many existing safeguards in place to protect Borrowers from inappropriate or unethical behavior.

Mortgage Brokers must hold an Australian Credit Licence (ACL) and adhere to the protections set out in the National Consumer Credit Protection Act 2001 (NCCP Act). In particular, a broker must not recommend a product that is unsuitable based on reasonable inquiries of the Borrower’s financial situation. In July 2020, a new legislation will be introduced which will require the mortgage broker to prove they have focused on what is best for their clients. Majority of mortgage brokers already practice this but this legislation will embed this into the finance framework and the ensure clients interest are above the broker and the lender.

Additionally, the structure of commissions is such that there is no incentive to promote unsustainable or unaffordable loans as both Upfront and Trail commissions are discontinued in the event of loan arrears or default.

The Bottom Line

Studies by the Banks have demonstrated that increased commissions do not result in increased loan volumes. Rather the drivers of higher volumes are competitive interest rates, loan product features and borrower service.

Mortgage Brokers promote strong competition between lenders and provide a valuable, transparent service to borrowers – any lessening of that competition will likely have the effect of increasing loan rates and lessening services provided to borrowers – the opposite outcome to that intended by the banking Royal Commission.

Read more about Home loans here!

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