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Make yourself at home
Edition 1168, June 14, 2007 |
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IF home is where the heart is, the ADF is doing all it can to assure its members achieve their heart’s desire.
In the recent Budget Treasurer Peter Costello announced the new Defence Home Ownership Assistance Scheme (DHOAS), one of a range of initiatives designed to improve ADF recruitment and retention rates.
The new scheme will become operational on July 1 next year and attention is now turning to developing the detail of its implementation.
Home ownership assistance is currently available to ADF members through the Defence Service Home Loan and the Defence Home Owner Scheme.
Both schemes were introduced at a time when the Australian housing market and the housing finance industry were very different to contemporary housing and finance markets, according to Director Housing and Removal Policy Robert McKellar.
“Complex and restrictive legislative provisions governing the operation of these schemes have meant that the assistance available has not kept pace with changes in these markets,” Mr McKellar said.
“Consequently, the value of the assistance is relatively minor when compared to the member’s overall borrowing requirements. In many cases, members are able to source better home loan value without accessing these schemes.
“The new DHOAS will overcome the shortcomings of existing schemes by providing a scheme that is reflective of contemporary housing and home finance markets, together with the flexibility to maintain relativity with both markets.
“The detailed policy supporting the DHOAS is being developed. As with all policy relating to ADF conditions of service, the DHOAS policy will be subject to the legislative process before it can be introduced on July 1, 2008,.”
He said it would be a priority to ensure that information made available reflects the Government’s intention for home ownership and would ultimately be supported by the legal framework for the scheme.”
For information about DHOAS, visit the Pay and Conditions website at http://intranet.defence.gov.au/pac/ or www.defence.gov.au/dpe/pac/ |
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PUTTING OUT THE WELCOME MAT
Qualifying period
- Permanent ADF members will be required to provide four years of continuous service. These members will be eligible to receive the subsidy after completing four years of service.
- If the subsidy is not accessed at this point, the entitlement accrues on a year-by-year basis.
- Extra years of subsidy are granted for warlike service according to that specified in the current legislation.
Subsidy assistance
- Permanent ADF members will receive a subsidised loan limit of $160,000 after four years of service, $234,000 after eight years of service; and $312,000 after 12 years of service.
- The amount you may be able to borrow will be between you and the lender. The portion of your loan that is subsidised will be constrained by the subsidised loan limits detailed above.
Value and amount of subsidy
- 37.5% of the average interest expense on a loan that is equivalent to the subsidised loan limits repayable over 25 years.
- The amount of subsidy includes $241 p/m for $160,000 subsidised loan limit, $353 p/m for $234,000 subsidised loan limit, $470 p/m for $312,000 subsidised loan limit.
- These figures may vary from those that apply from July 1, 2008.
Interest rates, deposits
- Subject to eligibility criteria, an option will be available to convert up to four years accrued subsidy period into a lump sum payment on purchase of first home in service. (i.e. up to four years accrued subsidy on a maximum subsidised loan limit of $160,000)
- A median interest rate will be used to calculate the value of the subsidy assistance.
- The interest rate will vary as a result of the flow-on effect of changes in official interest rates advised by the Reserve Bank of Australia to home loan interest rates.
- Subsidised loan limits will vary in response to annual movements in the national weighted average house price.
Transfers
- Members of current schemes can access the new scheme provided members are still serving at July 1, 2008, and meet the new scheme’s eligibility criteria. Members transferring to the new scheme will be responsible for all costs associated with finalising their existing mortgage and taking out a new mortgage with a member of the DHOAS home loan provider panel.
Important note
- While this information reflects the Government’s intention to provide home ownership assistance in the absence of a legal basis, it does not establish an entitlement, and may be subject to change before July 1, 2008.
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