Defence Housing Entitlements
As we come from an ADF background, hopefully you can concede that this makes us
uniquely placed to discuss the special ADF housing entitlements that you are eligible
to receive. These are loosely grouped into two categories - ‘assistance to purchase’
(HPAS/HPSEA) and ‘assistance to repay the loan’ (DHOAS). Now, let's have a look at
both of these - and put the terms against the acronyms. After you have read this -
keep in mind that it is always available in the PACMAN for you to check up anytime;
however it will not be laid out as easily as this! NB: All quoted figures are as at
Home Purchase Assistance Scheme (HPAS Defence Payment)
As a member of the ADF you are eligible for assistance to purchase your home. HPAS
comes in the form of a lump sum payment of $16,949, before tax. Note that it will
reflect your share of ownership (ie - joint ownership with a non-ADF member will see
the amount halved).
To be eligible to receive a HPAS defence payment, you must meet the following criteria:
1. You must not have received HPAS before; it is payable only once in your entire
period of service.
2. You must purchase a home in your current (or new) posting location.
3. On the day that you sign contracts, it is expected that you will serve in the
location for 12 months after the purchase. Also, this means that you will have to
live in the house for the remainder of your posting tenure to that location.
4. If you are MWD(U), you need to remain that categorisation for the next 12
The best part? You are eligible to receive this lump sum payment BEFORE you need
to pay your deposit as you are considered to have purchased a home when you have
signed either the contract to purchase or the agreement for it to be built.
Home Purchase or Sale Expenses Allowance
While we are strong advocates for a ‘buy and hold’ property strategy, there are some
circumstances when it is untenable to continue ownership of a property. HPSEA is an
allowance for the reimbursement of costs to an ADF member when they sell a home
at the time they are being posted to a new location; or if they sell in their previous
posting location and buy again in the new location. An example of this would be if
you own a home in Sydney, then get posted to Brisbane and want to buy a new home
there. You would be eligible to receive HPSEA to reimburse the sale and purchase costs, including real estate commissions. This is to compensate the relatively high transactional costs of selling and buying. For this allowance, the amounts that you will receive through HPSEA vary, depending on your costs - but they are covered in extensive detail within PACMAN.
Defence Home Ownership Assistance Scheme (DHOAS)
DHOAS was designed to achieve two aims within the ADF - help you and your family
achieve home ownership; and to improve recruitment / retention. Fortunately for
many of you, this means that you are able to service your loan easier. How is this
so? Basically, DHOAS subsidises your home loan, for an amount and period of time
based on how long you serve. As of 2018 it contributes a monthly amount between
$234 and $469 off your loan. Not bad for just being an eligible ADF member, right?
The amount you are entitled to receive varies, based on a three tier system - as seen
in the table below and very importantly, it can be used for two years after discharge
(keep that in mind for later...)
The Australian Average House Price (AHP) is used to determine the subsidised loan
limits under the three tiers. Each tier’s subsidised loan limit represents a percentage
of the AHP, as shown here:
● Tier 1, is 40% of the AHP
● Tier 2, is 60% of the AHP
● Tier 3, is 80% of the AHP – maximum benefit!
As at 1 July 2018, the AHP is $741,603
So you can see that the bad news is that you have to wait four years of service before
you gain access to DHOAS; and we recommend that you wait until you have done
at least eight years of service (achieve tier 2) before you pull the trigger. This is for
either of two reasons:
1/ you have a higher monthly subsidy (about an extra $120 per month stays in your
2/ you can use four years of your service in a lump sum - very useful if you are
struggling to save a deposit.
The real kicker is the main condition of receipt - you and/or your family must occupy
the home for at least 12 months and you will need to be occupying the home and
holding a valid subsidy certificate before your subsidy payments will commence.
Lastly, you need to note the three lenders that have been approved to provide DHOAS
Australian Military Bank
NAB - National Australia Bank
DHOAS Lump Sum Option
In addition to the subsidised loan outlined above, you can take 4 years worth of
DHOAS as a lump sum. You must have at least four years of subsidy already (a full
time person would have to serve 8 years). Subsidy is at Tier 1 level only (even if your
entitled to Tier 2 or 3).
This equates to $236 per month x 4 years [48 months] = $11,328. The really
powerful stuff comes from combining this amount with your respective State First
Home Owners Grant (FHOG) + HPAS + DHOAS Lump Sum. An example for an ADF
member in QLD would be almost $42,000 after tax!
NOTE: It is a condition of receiving a lump sum that you must not have previously
owned your own home or an investment property.
PRO TIP for couples: If you are in a recognised relationship with another ADF member,
you are both entitled to DHOAS and can split the loan. That means if you have both
served more than 8 years, you can get the subsidy for a loan up to $840,380 (2 x
$420,190) and received a monthly allowance of $710 (2 x $355). Now that is a
massive chunk off your monthly repayments!! NB: Considering DHOAS is mandatory
principal and interest repayments, regardless of the loan amount, then this is very
important to recognise in order to protect your cash flow!
How to use them?
Understanding what they are is just one piece of the puzzle. Understanding how to use them, with special focus on when and where you use them, is key to using them successfully. There are some restrictions, and some tips that you definitely need to know before you pull the trigger.
Have you watched our recent Facebook Live recording? Property coach Robbie Turner shows viewers case studies on exactly what happens when you get it wrong, and how and when to use them to get it right.
This is an excerpt from Robbie's book "The Commando Approach To Property Investing".
ADF Members and their families can download their free copy by clicking here.
Disclaimer: Above information is correct as at 14 July 2018 based on information provided by dhoas.gov.au
Axon Property Group Pty Ltd
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