URGENT UPDATE: Beyond Bank Pauses 5% Deposit Scheme Pre-Approvals Amid Surge in Demand

First Home BuyersHome LoansMortgage Strategy

18 Nov

SYDNEY, AUSTRALIA – First-home buyers relying on the Australian Government’s popular 5% Deposit Scheme (formerly the Home Guarantee Scheme) are being urged to exercise caution, following a decision by Beyond Bank Australia to pause pre-approvals under the program.

The decision comes due to an immense surge in demand following the recent, fast-tracked expansion of the government scheme.

The expanded scheme, which came into effect on October 1, 2025, made homeownership more accessible by removing caps on places and income limits for eligible first-home buyers, allowing them to purchase a property with as little as a 5% deposit while avoiding the cost of Lenders Mortgage Insurance (LMI).

The Immediate Risk to Buyers

According to industry commentary, the pause by Beyond Bank is a crucial signal that other participating lenders may follow suit as they attempt to manage capacity and overwhelming application volumes.

The primary concern for first-home buyers is the risk of placing a deposit on a property without proper pre-approval. This "seriously risky" situation could leave buyers trapped after signing a contract if:

They cannot service the loan.

They do not meet the scheme’s full eligibility criteria.

The bank cannot approve them in time to meet settlement deadlines.

What Buyers Should Do Right Now

To navigate the current environment of high demand and potential lender capacity constraints, it is recommended that you speak to your financial team, consisting of you mortgage broker, bookkeeper/ accountant who can help provided clarity, preparation, and professional guidance:

Don’t Rely on Social Media Advice: Every financial and property situation is different. Rely on certified professionals, not unverified online sources.

Get Proper Guidance Early: Secure professional advice before starting the purchasing process to ensure you understand all requirements and risks.

Work With an Expert: Partner with a mortgage broker or advisor who fully understands the scheme, the lender panel, and the latest policy changes across various institutions.

Have Multiple Lender Options: Do not rely on a single lender. The current market volatility means having multiple pre-approved options provides a critical backup plan.

Be Truly Purchase-Ready: Ensure all documentation is up-to-date and your eligibility is confirmed before putting money down or signing any contract. Being "purchase-ready" is the only way to avoid financial trouble.

The Australian Government’s 5% Deposit Scheme is still running, and great opportunities remain for first-home buyers. However, the current situation highlights that diligence and expert preparation are now more critical than ever before.