DHOAS – Frequently asked Questions and misconceptions

Today, let’s delve into Double DHOAS (Defence Home Ownership Assistance Scheme). While it’s a familiar concept, it’s worth breaking it down. Essentially, Double DHOAS involves a monthly instalment that contributes to your mortgage, expediting your journey to homeownership. But there’s more to it then this basic overview. What we want to address are some common misconceptions and frequently asked questions. For instance, a prevalent one is combining HPAS (Home Purchase Assistance Scheme) with DHOAS on the same property.

The good news is, yes, you can do this, as long as you meet the occupancy requirement. These two entitlements can be applied to your property, but it’s crucial to note that it can’t be an investment property. So, if you’ve been pondering this idea, it’s time to reconsider.

Double DHOAS

Then, there’s the allure of Double DHOAS, which promises substantial benefits. It’s enticing when you think about $1,000 for you and another $1,000 for your partner, especially if you’re both at tier 3. However, the catch is that you need a $1.6 million loan. To put that in perspective, you’d be looking at a house valued around $2,000,000. Considering your current income, especially if you’re in the defence sector, this might not be a practical pursuit. But there’s a smarter way to leverage Double DHOAS without committing to a hefty mortgage.

You can use Double DHOAS sequentially on different properties. Start with your first property, utilizing one partner’s DHOAS entitlement. When a posting order comes your way and you move to another location, purchase a second property. Here, you can apply the second DHOAS entitlement. This way, you’re effectively making the most of Double DHOAS without getting tangled in a colossal mortgage. Instead, you have two reasonably sized mortgages, allowing you to maximize your grant without the burden of a 30-year commitment.

Don’t waste your DHOAS

In essence, it’s not just about getting benefits; it’s about using them wisely to secure your financial future. Understanding the nuances of DHOAS and planning strategically can help you make the most out of this valuable assistance program without trapping yourself in along-term financial burden.

DHOAS Facts Summarised:

Overview: Double DHOAS, initiated by the Department of Defence in July 2008, aids Australian Defence Force (ADF) members in achieving home ownership. It serves as a retention strategy, offering incentives for continued ADF service.

Application Process: To access DHOAS, members obtain a subsidy certificate from the Department of Veterans’ Affairs (DVA). Three designated Home Loan Providers (HLPs) facilitate DHOAS home loans: Australian Military Bank, Defence Bank Limited, and National Australia Bank.

Loan Details: DHOAS assistance is not tied to a specific loan amount. Members decide the loan amount with their HLP, considering the provider’s criteria. Subsidy amounts depend on entitlement tiers and the borrowed sum.

Entitlement Criteria: Qualification involves completing a service period and accruing a Service Credit. Permanent members require two consecutive years of service, while Reservists need four years of effective service. Service Credit accrual continues monthly for Permanent members and annually for Reservists.

Duration of Assistance: DHOAS assistance is available as long as Service Credit, a DHOAS home loan, and scheme conditions are met. Maximum assistance is 20 years without warlike service, potentially extending to 25 years for those with warlike service.

Entitlement Deductions: Previous participation in DHOAS or related schemes deducts from the entitlement period under the new DHOAS. Length of service, breaks, and specific conditions impact entitlement.

Subsidy Tiers and Limits: Entitlement is categorized into three tiers with corresponding subsidised loan limits and maximum monthly subsidies. The amount is determined by the loan balance and the capped interest rate.

Application and Lump Sum Payment: Applicants submit an online form with service records. A lump sum payment is possible, converting up to four years of Service Credit.

Scheme Conditions: Living in the home for at least 12 months is required. DHOAS loans are strictly for buying, building, or renovating homes, and Fringe Benefits Tax may apply.

Separation and Final Subsidy: Upon separation, members can apply for a final subsidy certificate. Payments are tiered based on years of service. Reservists need 20 days of paid Reserve service to maintain eligibility.

Fringe Benefits Tax: DHOAS payments are subject to FBT, impacting income tests for government benefits.

For queries and additional information, visit the DHOAS website or contact the DHOAS customer service team. https://www.dhoas.gov.au/

Or you can book a free session with one of our qualified property investment advisors and DHOAS experts. https://strikeproperty.com.au/discovery-session/

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