A Defence Force home loan with the backing of one of the big four banks
NAB has been providing home loan options to cater to those benefiting from the Defence Home Owner Scheme since 1991, and gives eligible Defence Force members flexible options when participating in the assistance scheme. The NAB Defence Force Home Loan allows you to choose from a fixed rate, variable rate or a NAB Choice package to finance a residential property.
|Product Name||NAB Defence Force Home Loan|
|Interest Rate Type||Variable or Fixed|
|Comp Rate^ (p.a.)|
|Minimum Loan Amount||$20,000|
|Maximum Loan Amount||$10,000,000|
|Maximum Insured LVR||95%|
|Mortgage Offset Account||Yes|
|Mortgage 100% Offset||Yes|
|Split Loan Facility||Yes|
|Fixed Interest Option||Yes|
|Suitable for Investment||Yes|
|Available as equity loan/line of credit||No|
|Repayment Type||Principal & Interest and Interest Only Options|
|Lender's Legal Fee||$0|
|Ongoing Fees||$395 p.a.|
- Interest rate discounts
- Range of variable and fixed rates
- Package discounts also available
- $0 application fees
- Construction options available
- Monthly fee of $395
- No redraw facility or 100% offset on fixed rate loans
How does the NAB Defence Force Home Loan work?
Eligible Defence Force members can receive subsidy payments on their mortgage through the Defence Force Home Ownership Scheme by applying for the home loan with one of the three Defence-nominated providers, NAB being one of them.
After you take out a home loan your subsidy will be paid directly into your home loan. The amount you borrow will be dependent on your home loan provider, and does not depend on any conditions within the scheme. The Defence Force will then subsidise a certain amount of the loan based on your eligible subsidy tier, which is outlined below.
Who is this loan suitable for?
The NAB Defence Force Home Loan is available to Australian Defence Force members participating in the new Defence Home Ownership Assistance Scheme. The loan is intended to be used for people looking to buy property or refinance an existing mortgage, but cannot be used for investment purposes. The variable rate loan is also available for construction. Eligible Defence Force members will need to reside in the home for a minimum of 12 months to continue receiving subsidies.
Features of the home loan
The loan combines the benefits of saving with the Defence Home Ownership Assistance Scheme with NAB’s flexible options. Some of the features of the loan include:
- Loan options. Borrowers can choose from a fixed rate, variable rate or NAB Choice Package loan.
- Offset accounts. The variable rate Defence Force Home Loans feature 100% offset accounts to help minimise interest.
- Redraw facility. You can get access to additional repayments you've made on these loans, although there is a minimum of $2,000. This is only offered on variable rate home loans.
- Flexible repayments. You can make repayments every week, fortnight or month and can make additional repayments, which are limited to up to $20,000 for fixed rate home loans.
- Maximum loan to value ratio. Borrowers can borrow up to 95 of the property value with this loan. Borrowing more than 80% of the property value will come with lenders mortgage insurance (LMI).
- Choice Package. You can include your NAB Defence Force Home Loan in a Choice Package, which allows you to combine your NAB home loan, credit card and insurance policies into one package that can save you money.
- Flexibility. You have the choice to fix your interest rate for 1-5 years or 10 years.
- Combine your options. You can split your loan into fixed and variable portions to help safeguard your finances while taking advantage of low interest rates
- Discounted variable rate. You can enjoy 0.80% p.a. off the standard variable rate.
The fees associated with this loan depend on the loan option you choose from NAB, but look below to see the rates that may be applicable.
- Lenders mortgage insurance (LMI). If you borrow more than 80% of the property value you'll need to pay LMI premiums. The amount of which will depend on the property price, location and more.
- Application fees: $0. If you opt for the variable or fixed Defence Force Home Loan, you'll pay this fee, which also includes the valuation and loan establishment costs.
- Monthly fee. $8 per month. If you don't opt for the Choice Package, you'll pay a monthly fee of $8, totalling $96 a year. This is waived if you take out a Choice Package.
- Annual fee. $395 per year. If you opt for the Choice Package you'll pay an annual fee in return for the discounts you receive.
The longer you serve in the Defence Force, the more entitlements you'll receive and the longer you’ll be able to receive assistance. The subsidies are based on a tiered system, which is outlined in the table below. Please note the figures below should only be used as a guide, and the actual monthly subsidy amounts can fluctuate each month based on interest rate changes.
Minimum permanent service
Minimum Reserve service
Subsidised loan amount
Maximum monthly subsidy
up to $223
Up to $335
Up to $447
The NAB Defence Force Home Loan is designed to assist current and former Australian Defence Force members and their families. You need to have served within the previous two years before applying for the Defence Home Ownership Assistance Scheme and you also need to have completed a qualifying period of service and accrued a service credit.
To be eligible for this loan you need to be able to meet strict requirements regarding the following:
Home loan conditions
- Loan use - loans must be secured by the subsidised property and must only be used for buying property or refinancing.
- Refinancing - If you are an existing homeowner with an outstanding mortgage you are able to refinance, but you need to check your eligibility.
- Redraws - Redraws are allowed as long as the original loan amount does not increase.
- Transferring entitlement - You can transfer your home loan entitlement to another property but you need to occupy the home for 12 months.
- Minimum occupancy - You need to occupy the home for at least 12 months.
- Posting - You are not eligible if you will be posted within a year, but you are entitled to keep your loan if you receive a posting and are required to move before the minimum 12 month occupancy is completed.
- Moving - If you move before the minimum occupancy period of 12 months is met then your payments will be cancelled.
- Closing the loan - If you close your Defence Force Home Loan and take out another loan you will need to reapply for a Subsidy Certificate and have your payments reassessed.
- Occupancy exemption - The minimum 12 month occupancy is waived only in certain circumstances.
Construction loans and conditions
- Construction time frame - If you are accessing the loan for construction purposes you have two years to complete the construction process and occupy the home.
- Occupancy - After construction is complete you still need to meet the minimum occupancy requirement of 12 months.
- Minimum interest - You need to hold, either alone or with your partner, at least a 50% interest in the property.
- Business properties - You cannot use the subsidy for a property that is used primarily for business purposes (ie. something generating an income or profit).
Lump sum conditions
- Service credits - You must retain sufficient service credit to support ongoing monthly subsidy payments.
- Service term - There's a reasonable expectation that you will continue to serve for another 12 months at least.
- Investment properties - You cannot have bought a home, to live in or as an investment, while serving.
- Max credits - A maximum of 48 months service credits may be exchanged for a lump sum at the tier 1 level.
- Eligibility - You are not entitled to a lump sum if you bought a residential property before you were given the Subsidy Certificate that is used as a basis for the lump sum request.
How to apply
To apply for a NAB Defence Force Home Loan, you need to take the following steps:
- Qualify and accrue service credit
- Apply for a Subsidy Certificate. This certificate takes about five business days to process.
- Take your Subsidy Certificate to NAB and decide on a loan option that suits your needs.
- When you apply with NAB you will need to provide ID, financial information including debts, assets and income, residential status and your Subsidy Certificate.
- After your home loan is settled and drawn, NAB will advise the Defence Force of the home loan balance and you need to submit a Subsidy Authorisation Request Form.
- The Defence Force Home Owner Assistance Scheme will then calculate your subsidy and lump sum payments if applicable and you will then receive a letter with the payment details.
- You will then start receiving the subsidy amount directly into your home loan each month.