Defence Home Loans

Hoping to take advantage of the Defence Home Loans (DHOAS) initiative as an Australian Defence Force member? At National Service Financial, we offer expert financial advice, financial planning and access to accredited DHOAS home loan providers.

“Founded and managed by an ex-military member, National Service Financial has an in-depth understanding of Defence personnel’s unique needs.”

We are dedicated in ensuring ADF personnel make the most of all benefits available to them as serving members so they can build their wealth and prepare for a financially secure future.

What Is A DHOAS Home Loan?

The Defence Home Ownership Assistance Scheme:

“Provides eligible current and former serving members of the Permanent Force and the Reserves with a subsidy on the interest of their home loans. The subsidy is paid monthly, directly into a DHOAS home loan.”

“As a specially designed Defence home loan, we highly recommended that ADF home buyers seek professional advice prior to applying for one of these loans. ”

This is something National Service Financial has extensive experience in.

Who Is Eligible For DHOAS Loans?

ADF members must meet lending criteria in order to qualify for these subsidy payments. Conditions linked with securing a property under this home purchase assistance scheme include:

Actively serving with the Australian Defence Force within the last five years.
Completing a qualifying period of service.
Needing to accrue service credit.

Additional Scheme Conditions

Before your payments can begin, you must also present your valid subsidy certificate and commit to yourself and/or your family living in the home for a period of at least 12 months. You will also be required to provide proof of the purpose for the loan amount (i.e. to provide a home for a current or former ADF member), your percentage of interest in the loan and associated property.

Should you be applying for a multi-party or construction loan, there will be additional conditions to adhere to as well. ADF members are expected to understand and comply with all outlined conditions when undertaking a DHOAS loan. Failure to do so can lead to your subsidy being cancelled.

How It Works

The monthly subsidy values determined are paid directly into your loan account, rather than to your bank account or offset account. They are paid monthly rather than in a lump sum.

You can use these subsidy payments as part of your monthly repayments, or as extra repayments that help you reduce your mortgage faster.

Your monthly allowance under the subsidy can fluctuate or change. This can be due to changes in median interest rates used to calculate the average monthly interest rate. It may also be because of you reaching a new service milestone and progressing to a new tier level, or a departure from the ADF prior to 20 years of active service.

Any concerns relating to changes to subsidy payments should be directed to the Department of Veterans Affairs. DVA is responsible for the calculation and disbursement of all Defence Home Loan subsidy payments.

How Are Monthly Subsidy Values Determined?

There are three subsidy tiers from which an ADF members subsidy will be determined. A permanent member moves more quickly through the tiers than a reserve, with added benefits for this long-term continuing connection.

The exact amount provided will not only depend on time spent in service but also the amount borrowed. As an indication, the Defence Home Loan Scheme outlines the following tiers:

Tier One – this is for permanent members who have served a minimum qualifying period of four years or eight years as a reserve. These members can receive a subsidy up to 40% within the specified loan limits.
Tier Two – permanent members need to have served a minimum of eight years or reserves 12 years to qualify for tier two. Tier two offers subsidies of up to 60% within the specified loan limits.
Tier Three – The highest subsidy tier, permanent members need to have served a minimum of 12 years and reserves 16 years. A subsidy of up to 80% within the specified loan limits is available.

To review the subsidy amount you may qualify for, the DHOAS includes a subsidy calculator on their website. However, this is to be used as a guide only as it cannot factor in other eligibility factors.

You should apply for a subsidy certificate from the DHOAS to obtain a formal estimate of your subsidy amount.

These percentages are based around the Average House Price (AHP) and are adjusted regularly to remain in line with current market values.

What Role Does Service Credit Play?

Service credit accrues after you complete your qualifying period. It is simply another way to account for your years of service and where you fall on the subsidy tiers.

Your total service credits will review your years of effective service length, plus any additional years accrued from participating in foreign service. You can accrue a maximum of 20 years of service credit for standard service, and up to 25 years for wartime service.

DHOAS Home Loan Providers

As part of the ownership assistance scheme (DHOAS), Defence Australia has appointed a panel of just three trusted home loan providers. These lenders have exclusive rights to offer DHOAS home loans, and any alternate entity offering these loans is to be avoided and reported.

Developed in line with the DHOAS scheme arrangements, the following banks offer competitive loan products:

The Australian Military Bank
Defence Bank Limited (Defence Bank)
National Australia Bank (NAB)

“Focused on delivering Defence home loans with the best-discounted rates and fee waivers where possible, DHOAS loans make it easier for ADF members to enter the property market.”

How To Apply For An Australian Defence Force Home Loan

Before you can apply for a loan with DHOAS home loan providers, you must obtain your subsidy certificate via the Department of Veterans Affairs.

You can then prepare an application for submission directly to one of the three approved banks or seek the help of a mortgage broker to guide you through the process.

Just as the wider community goes through a strict assessment prior to approvals on standard mortgage applications, so do ADF members. It is possible to be declined for a Defence Home Loan, however, working with an experienced mortgage broker is the best way to avoid a rejection or complications with your application process.

Why Choose A Mortgage Broker?

Defence Home Loans We highly recommend that you seek the help of a qualified mortgage broker to assist you with the application process for several reasons. Mortgage brokers, such as National Service Financial, review all available loan options on your behalf and seek the best option.

Mortgage brokers can also explain other benefits available to you, advise on different comparison rates, fees, and calculate your monthly repayments.

They will also ensure you account for a sale expenses allowance to cover stamp duty, and lenders mortgage insurance if applicable.

As defence-accredited mortgage brokers, we will help you make the best possible decision for your individual circumstance.

Work With Trusted Professionals

At National Service Finance, we are accredited and authorised mortgage brokers for Defence Home Loans and FASEA-qualified financial planners. This means we are best positioned to help Australian Defence Force members secure their own homes under the Defence Home Ownership Assistance Scheme and create long-term financial security.

We have a long history of supporting members of the Australian Defence Force in achieving their home ownership dreams. We advise on the maximum loan amount available and seek the best interest rate, whether variable or fixed.

What Happens If Close My Defence Force Home Loan Early?

So you want to sell and close your loan only two years into a 10-year service credit. What happens now? To access the remaining eight years of service credit entitlements, you would need to reapply for a subsidy certificate and begin the Defence Home Loan process again.

This also means meeting all other conditions again, such as the 12-month occupancy requirement – even if this was completed during the previous loan term.

Eligibility for HPSEA if buying a home

You may be eligible to claim reasonable costs if you

buy a home

and:

you or your family live in it
your last benefit was for the sale of a home
you have at least 12 months left in your posting location from the date you sign the contract
you sign a contract to buy it within 4 years of getting your posting order to the new location.

Buying a home includes if you:

buy an existing home
build a new home
buy land to later build a home on.

If you live away from your family for Service reasons, you may buy a home in their location. This doesn’t include if your family live in a personal location. They need to live in it for at least 12 months.

You won’t be eligible for HPSEA for buying a home if you expect to separate from the ADF in the next 12 months.

If you sign a contract to buy a home before you get your official posting order, you usually won’t be eligible for HPSEA for that home.

Costs you can claim for buying a home

Costs you can claim include:

solicitor or conveyancer fees
broker fees
government duties or fees.

You can’t claim costs related to home ownership, such as building or land surveys, council rates, or utilities.

Applying for HPSEA if buying a home

Use an Application for Home Purchase Assistance Scheme or Home Purchase or Sale Expenses Allowance (AC970) form. You can download this from the webforms portal on the Defence Protected Network (DPN).

Before you start

Check what documents you need to submit with your application. These may include:

your posting order
a copy of a signed and dated land and/or building contract
a copy of your settlement confirmation
copies of tax invoices or receipts for payments you’re claiming such as pre-purchase building inspections, stamp duty or solicitor fees.

To apply:

Open an AC970 form
Select HPSEA – on purchase in the Application type section
Answer the question about previous applications
Complete the Member’s details section
Complete the Reimbursement of purchase costs section
Attach any supporting documents
Send your application to your Commanding Officer (CO)

Your CO will submit the form to [email protected].

National Service Financial – Defence Home Loan Experts

At National Service Financial, we recognise that the Defence Home Ownership Assistance Scheme represents an incredible opportunity that is well deserved. However, it can also be incredibly confusing.

As a company founded and managed by an ex-Defence force member, we offer a unique understanding and compassionate approach to ADF personnel. Whether in active service, retired or veteran status, we’re here to help you secure your entitlements under the Defence Home Ownership Assistance Scheme.

A defence force home loan is a fantastic benefit for ADF members, and one we believe should be actively pursued and advertised.

Our qualified, accredited and professional team are here to make the process easier and faster, so you can be in your new home sooner than ever.

Call National Service Financial to work with a team of trusted professionals who truly have your best interests at heart. As experts in Defence Home Loans, we have the skill and expertise needed to secure your next home and your financial future.

Call our team today on 1300 580 802 to book your financial discovery appointment.

FAQS

Are DHOAS Home Loan Subsidy Payments Tax-Free?

Defence home loan subsidy payments are classed as a reportable expense under the Fringe Benefits Tax (FBT) Assessment ACT 1986. This means they must be declared within your tax return at the end of each financial year.

FBT can affect your taxation obligations where child support or other grants and government payments are concerned. This includes Family Tax Benefit, HECS-HELP loans and the Medicare Levy. Our financial advisors can discuss these implications in further detail with you as needed.

How Long Do DHOAS Monthly Subsidy Payments Last?

Defence home loan subsidy payments are payable up to a maximum of 25 years, or whenever you expend your DHOAS service credit. Should your entitlements be due to cease, you will receive a notification from DVA.

Payments can also cease due to a host of other certain circumstances such as increasing the loan amount, refinancing, renovating, expanding or adding a granny flat, you can no longer meet the conditions of the scheme, you close the loan, repay your loan in full and more.

What Is The Maximum Loan Amount Allowed?

There are specified loan limits relating to the determination of subsidy tier values. The maximum loan amount is quite generous, sitting at $1,0005.397 as at July 2022. This is a significant increase from the maximum loan amount permitted in 2008-2009 which was $467,897.

Your National Service Financial broker can walk you through what these loan limits mean for you and your Defence Home Loan application.

Are There Any Other Grants Available Under The Home Purchase Assistance Scheme?

Yes, there are some other Defence housing entitlements available such as the Home Purchase Assistance Scheme (HPAS) payment. This payment offers a lump sum payment of 16,949 before tax to be used towards your deposit or other buying costs. Also known as a sale expenses allowance, this payment can be used in conjunction with your Defence Home Loan.

Defence helps members selling or buying a home.

The Home Purchase or Sale Expenses Allowance (HPSEA) is a reimbursement for some costs related to selling a home. If you’re buying a home other than your first, you can claim some costs using HPSEA.

HPSEA works on a sell-buy-sell cycle linked to your posting.

This cycle usually starts once you get approval for Home Purchase Assistance Scheme (HPAS) on your first home. Once you get your next posting order, you’re eligible to claim HPSEA if you sell that home.

You don’t need to buy and sell every posting, but you do need to keep the claim cycle open. This means you need to keep meeting the eligibility criteria for both selling and buying a home, including the time limits.

If you break the ‘sale’ cycle, you can re-enter it in the future. You need to sell the home you’re living in at the time you get your posting order to a new location.

The sale of the home triggers your eligibility to make a claim.

Eligibility for HPSEA if selling a home

You may be eligible to claim reasonable costs if you sell the home in the location you’re leaving and:

you or your family live in it
the sale costs are related to your new posting
you previously got HPAS or HPSEA for buying a home
you sign a contract to sell the home within 2 years of getting your posting order to the next location.

You can also get HPSEA for selling a home if your continuous full time service (CFTS) will end in the next 12 months.

When time limits don’t apply

The usual time limits for selling a home don’t apply if you’re posted to:

an overseas location
a specified location
an adjacent posting location
a location where you’re required to stay in living-in accommodation or a Service residence.

Your eligibility is on hold in these circumstances because you cannot buy a home in these posting locations. Your two-year time limit to sell a home begins again the day you get your next posting order in Australia.

Costs you can claim for selling a home

Costs you can claim include:

solicitor or broker fees
agent or auctioneer fees or commission
government duties or fees.

Costs you can’t claim include:

staging fees
pre-sale inspections
home and garden cleaning or maintenance.

Applying for HPSEA if selling your home

Before you start

Check what documents you need to submit with your application. These may include:

your posting order
a copy of your settlement confirmation
a copy of your mortgage release
copies of tax invoices or receipts for payments you’re claiming, such as real estate agent, solicitor or conveyancer fees.

To apply:

Open an AC970 form
Select HPSEA – on sale in the Application type section
Answer the question about previous applications
Complete the Member’s details section
Complete the Reimbursement of sale expenses section
Attach any supporting documents
Send your application to your Commanding Officer (CO)

Your CO will submit the form to [email protected].

You’ll get an email advising you on the outcome of your application within 6 weeks. Defence pays the money into your nominated bank account via ROMAN usually within 10 business days of approval.

If your CFTS is ending, you won’t get the money until you’ve been discharged and moved to your new location.

DHOAS