» Reserves
» Eligibility Requirements
» Length of Entitlement
» Accessing Entitlement
» Subsidy Payments and Lump Sum
» Transfering from Permanent Force to Reserves
» Exemption from Effective Service Requirement
Reserve Members
This section provides details about DHOAS eligibility and entitlements for Reserve members. There are differences in the requirements for Reserve and Permanent members.
The length of the qualifying period that Reserve members need to complete, and the service milestones they need to reach to move to higher subsidy tiers, differ from the Permanent ADF.
In addition, a Reserve year is completed within a financial year, while Permanent members complete their service within the calender year.
There is also a special application of Continuous Full-Time Service to help Reservists fast-track their qualifying period.
Information specific to Reserve members is provided on the following four topics. These are key factors for all members to consider around DHOAS eligibility and entitlement:
- Completing the qualifying period and gaining a minimum service credit
- Identifying your eligible subsidy tier, and calculating your subsidy payments based on your tier and actual home loan amount
- Accruing entitlement to DHOAS, including additional entitlement accrued from warlike service and the impact of breaks in service and access to previous Defence home ownership schemes, DHOS or DSH
- Accessing your entitlement, including the option of a lump sum payment (if eligible)
If you're a Permanent ADF member transferring to the Reserves, and you want to maintain your DHOAS subsidy assistance, see the section "Transferring from the Permanent ADF to the Reserves" so you know how to preserve your status as a serving member.
For other detailed information, you can also refer to the sections under "Eligibility and Entitlement", including Warlike Service, Switching to DHOAS, Service Variables, and Rejoining the ADF After a Break and Separation.
IMPORTANT NOTE
Your eligibility and entitlement to DHOAS can change significantly if your circumstances change. For example, if you separate from the ADF; your one-off, post-separation Subsidy Certificate expires after 12 months; or you do not complete effective service as a Reservist.
If you sought information about DHOAS some time ago and were advised at that time you were eligible for DHOAS or had a certain level of entitlement, please do not assume this advice remains valid if your circumstances have changed.
You are urged to speak again with a DHOAS assistant or to re-check this website to ensure your understanding of your eligibility and entitlement remains correct.
Eligibility requirements
Reservists need to have served after 1 July 2008 to be eligible for DHOAS.
To access DHOAS assistance, you first need to complete:
- A minimum qualifying period of effective Reserve service.
- Sufficient service to accrue entitlement, which is known as a Service Credit.
Qualifying period
For Reservists, the qualifying period is eight years of effective Reserve service performed in consecutive, financial years.
Effective service for a Reservist is a minimum of 20 days service performed between 1 July to 30 June, as the Reserve service year is completed within the financial year.
During the qualifying period, your continuity of service is broken if you do not complete the minimum 20 days of Reserve service within a financial year.
If you break your continuity of service you will need to restart your qualifying period from when you complete an effective year of service.
You can complete your qualifying period faster if you complete Continuous Full-Time Service.
Continuous full-time service
A special condition is available to Reserve members who perform CFTS during the DHOAS qualifying period. The condition provides you with an opportunity to accelerate your qualifying period.
If you complete more than six months of CFTS within a financial year you will contribute a total of two years towards your eight year qualifying period.
This includes one standard Reserve year in lieu of 20 days service, as well as one extra year for the CFTS special condition.
This special condition does not apply to CFTS that was completed prior to taking a break in service that disrupts your continuity of service during the qualifying period.
For example, if you take a break in Reserve service of one financial year before you complete the eight years, you will need to restart the qualifying period. Any service completed prior to the break, including CFTS, will not contribute to the eight year requirement.
Please note this special application of CFTS is only valid during your qualifying period. Once you have completed your eight years, you will accrue a standard year of entitlement to DHOAS for every year of service you complete (whether that is by doing Reserve service or CFTS).
CFTS will not help you to fast track through the Subsidy Tiers nor will it add extra years to your standard accrued entitlement.
Example - Continuous Full-Time Service
A member of the Reserves completes six years of consecutive, effective service. The member then provides seven months of CFTS within the financial year. This adds two years towards their qualifying period.
This means the member has completed the eight year qualifying period for DHOAS. (This includes six years Reserve service plus two years gained from more than six months of CFTS.
After this qualifying period, the member then completes another eight months of CFTS within a financial year. This CFTS will not add two years towards their accrued entitlement. They will gain the standard one year of accrued entitlement. The following table indicates their entitlement:
Service provided | Towards 8 year qualifying period | Towards accrued subsidy entitlement |
6 years Reserve service | 6 years | Nil |
7 months CFTS | 2 years | Nil |
8 months CFTS, after end of qualifying period | ___ | 1 year |
Service Credit
Before Reserve members can access DHOAS they must first complete their qualifying period of eight years and then after this, also gain a Service Credit.
A minimum Service Credit is gained after completing 20 days or more of effective Reserve service within a financial year.
Reservists will continue to accrue one year of entitlement to DHOAS for every financial year of effective service they complete thereafter.
Therefore, you must first complete your eight year qualifying period plus complete at least 20 days of Reserve service within a financial year before you can apply for a DHOAS subsidy.
Please note that the period of time you have accessed an existing Defence loan subsidy scheme, either the Defence HomeOwner Scheme or Defence Service Homes, will be subtracted from your entitlement to DHOAS. See Length of Entitlement. Breaks in service can also impact on your DHOAS entitlement.
Example of eligibility requirements for DHOAS
You joined the Reserves in the 2000-2001 financial year and provided 20+ days service within that financial year as well as in 2001-02. Then you did not provide any service in 2002-03.
However, you provided the minimum service in each financial year from 2003-04 up to 2007-08, and are still in the Reserves.
As you broke your continuity of service in 2002-03, your service has not been performed in consecutive years and your service before then (in 2000 and 2001) will not contribute towards your eight year qualifying period.
Only the service from 2003-04 onwards will count towards meeting your qualifying period.
This means you will finish the qualifying period in 2010-11 (this will be reached sooner if you complete over six months of CFTS).
After finishing the qualifying period, you will then need to complete one more financial year of Reserve service (at least 20 days within 2011-12) before you can start to access DHOAS at Tier 1.
By this time in 2011-12, you will have accrued a Service Credit of one year of entitlement.
You will continue to accrue one year of entitlement for every financial year of Reserve service thereafter (up to a maximum of 20 or 25 years).
CHECK: You should check your PMKeyS records to ensure that they're up-to-date and include all of your service in the ADF, in either the Permanent Forces or the Reservists, as well as any war-like service you have completed.
If your records include any errors or omissions you should raise the matter with your chain-of-command.
If your records are out-of-date and we check your DHOAS eligibility or entitlement against them when it is time to progress your subsidy payments or to determine your Service Credit, this may result in a miscalculation. This could result in a drop to your subsidy tier level or even your payments being ceased.
Effective Reserve Service and Separation
Please note: If you are a Reservist and you do not complete effective Reserve service within a financial year you will be deemed to be discharged for the purpose of DHOAS. "Effective" Reserve service is defined as at least 20 days of active Reserve service within a financial year.
For the purpose of DHOAS, this requirement to complete at least 20 days of active service or be deemed to be discharged applies to all Reservists, whether you are in the Standby, High Readiness or any other Reserve-type service.
If you do not complete a year of effective service, this could impact on your DHOAS eligibility and entitlement. Please refer to Separation and Rejoining the ADF after a Break for further details.
If you are in receipt of a DHOAS subsidy and then reapply for a new DHOAS Subsidy Certificate after an extended break in effective Reserve service, you need to be aware that the rejoining provisions may impact on your entitlement. This could result in you dropping to a lower Subsidy Tier level, or having the length of your entitlement shortened.
You may need to determine if it is better in your circumstance to continue receiving your current DHOAS subsidy (on your existing eligible DHOAS home loan) than it is to reapply, and possibly impact on your future entitlement.
You are advised to contact DHOAS before making any significant changes to your DHOAS subsidy arrangements.
Special circumstances
Members who do not complete 20 days of effective Reserve service within the financial year may apply to the relevant DGPERS for an exemption based on special circumstances.
Postal addresses for DGPERS
DGNPT Director General Navy Personnel and Training: R8-1-016, Russell Drive, Canberra, ACT 2600
DGPERS Director General Personnel - Army: R8-9-025, Russell Drive, Canberra, ACT 2600
DGPERS Director General Personnel - Air Force: R8-0-019, Russell Drive, Canberra, ACT 2600
Period of subsidy assistance
You can receive DHOAS assistance for as long as you have a Service Credit (and an eligible DHOAS home loan).
For every year of effective Reserve service you complete after your initial qualifying period of eight years, you will accrue entitlement to one year of subsidy assistance. (An "effective" Reserve year is at least 20 days of Reserve service within a financial year.)
Please note you are not granted your year of DHOAS entitlement until you have actually completed the 20 days of Reserve service within the financial year. You don't have to wait until the end of the financial year to accrue the entitlement, if you complete the 20 days earlier in the year then you will be granted the additional Service Credit at that date. For example, if your 20th day of Reserve service within the 2010-11 year is completed by 1 September 2010, you will accrue your one year of entitlement on 1 September 2010 (not 30 June 2011).
Your monthly subsidy cannot be paid in advance of you completing the effective service, on the assumption that this will occur alter in the year. Therefore, if your DHOAS Service Credit runs out before you can complete further effective service, your subsidy payments will cease. They can resume once you undertake the effective service, as long as all other DHOAS conditions can be met.
Overall, your Service Credit equals the total years of ADF service you have completed, minus your qualifying period.
Once you start accessing the DHOAS subsidy payments you stop adding to your Service Credit.
You can simultaneously accrue and access the DHOAS subsidy as long as you are in the ADF. Then, after you separate, you can continue to access DHOAS using your outstanding Service Credit.
You can accrue and access up to a maximum of 20 years of DHOAS assistance without warlike service. This may increase up to 25 years if you have provided warlike service.
Warlike service and previous access to Defence loan subsidy schemes can impact on your total Service Credit. Also, the period of time you serve in the ADF will determine the subsidy tier level at which you'll receive your DHOAS assistance after you separate (see details below).
Example
You are a current serving member and have been in the Reserves for 18 years. If you subtract your qualifying period of eight years, you have 10 years of accrued entitlement - your Service Credit.
You start receiving the DHOAS subsidy today. You can continuously accrue then access the DHOAS subsidy for as long as you are in the ADF.
Then, after you separate, you will be able to receive DHOAS for another 10 years, using your outstanding Service Credit. (Your Service Credit may increase with warlike service.)
Please note the total combined period of time that you can receive DHOAS, before and after separation, is up to your maximum entitlement of either 20 or 25 years.
| Service years | Qualifying period | Service Credit | ||
| 18 years | less | 8 years | equals | 10 years |
CHECK: You should check your PMKeyS records to ensure that they're up-to-date and include all of your service in the ADF, in either the Permanent Forces or the Reservists, as well as any war-like service you have completed.
If your records include any errors or omissions you should raise the matter with your chain-of-command.
If your records are out-of-date and we check your DHOAS eligibility or entitlement against them when it is time to progress your subsidy payments or to determine your Service Credit, this may result in a miscalculation. This could result in a drop to your subsidy tier level or even your payments being ceased.
Warlike service
If you complete warlike service you can extend the period of time that you receive DHOAS. You will be entitled to additional periods of subsidy assistance as set out in the following table:
Period of warlike service** | Additional subsidy periods |
| Not more than 3 months | 2 years |
| More than 3 but not more than 6 months | 3 years |
| More than 6 but not more than 9 months | 4 years |
| More than 9 months | 5 years |
- ** Any time spent on out-of-country leave during your warlike service does not count towards the warlike service bonus period.
You can accrue up to a total of 25 years entitlement to DHOAS when you include warlike service.
This special application of additional entitlement for warlike service will not fast-track your qualifying period of eight years.
Nor will warlike service fast-track you to a higher subsidy tier level. You still need to complete the minimum years of service required to be eligible for a higher subsidy tier.
This extra entitlement gained from completing warlike service only increases the total period of time over which you may receive the DHOAS assistance.
Please note your additional accrued entitlement from warlike service is recognised for the purpose of converting your available service credit into a lump sum (up to a maximum of four years).
Example
You're a member of the Reserves who has completed six consecutive years of effective service in total, including seven months of warlike service.
If your warlike service involved over six months of Continuous Full-Time Service you will gain two years towards your qualifying period. Therefore, you will have completed your qualifying period.
On becoming an eligible member you will also have accumulated an extra four years accrued DHOAS subsidy entitlement as a result of your warlike service.
You will be able to access DHOAS immediately (on Tier 1 benefits) and continue to receive the subsidy assistance as long as you're in the ADF. In addition, you will be able to receive DHOAS for another four years after you separate.
Alternatively, you may wish to convert your four years of extra accrued entitlement from your warlike service into a lump sum, if you're eligible to do so (see Lump Sum Option).
Definition of a Month
A "calender month" (as defined by the Act Interpretation Act 1901) means a period that meets both the following criteria:
a. it starts at the beginning of a day of a month
b. it ends at either of these times:
i. immediately before the beginning of the corresponding day of the next month
ii if there is no corresponding day in the next month - at the end of the next month
For example: 12 May 2000 - 11 June 2000; 30 January 2005 - 28 February 2005.
Previous schemes and entitlement
If you have previously accessed a Defence scheme, either the Defence HomeOwner Scheme (DHOS) or Defence Service Homes (DSH), this will impact on the length of time you can access DHOAS.
You need to subtract the period of time that you have received the DHOS or DSH benefits from the length of your accrued DHOAS entitlement.
It will not impact on your eligible subsidy tier or the amount of subsidy you receive, but on the length of time you can receive the DHOAS subsidy payments.
Please note a member can accrue a maximum of 20 years entitlement to DHOAS, without completing warlike service, and a maximum of 25 years with warlike service.
If you have previously accessed DHOS or DSH for this period of time - that is, for as long or longer than your maximum DHOAS entitlement of 20 or 25 years - then you will be unable to access DHOAS, even if you continue to serve in the ADF.
Example
You have served as a Reserve for 20 years, which means you have an accrued entitlement to DHOAS of 12 years (total years of service minus your eight year qualifying period).
However, you have received benefits under the old scheme, DHOS, for eight years. These eight years are subtracted from your 12 years of accrued entitlement.
This leaves you with four years of accrued entitlement to DHOAS.
This means you can receive DHOAS assistance for as long as you are in the ADF (up to your maximum entitlement of 20 or 25 years) and, in addition, you can continue to receive DHOAS for another four years after you separate (up to 20 or 25 years).
As you have completed 20 years of service you're entitled to receive subsidy assistance at the Tier 3 level, as long as you're in the ADF and after you separate.
Please note that after separation, benefits are paid at the Tier 1 level if you separate before completing 20 years of service, and at the Tier 3 level if you stay for over 20 years.
Effective Reserve Service and Separation
Please note: If you are a Reservist and you do not complete effective Reserve service within a financial year you will be deemed to be discharged for the purpose of DHOAS. "Effective" Reserve service is defined as at least 20 days of active Reserve service within a financial year.
For the purpose of DHOAS, this requirement to complete at least 20 days of active service to not be deemed to be discharged applies to all Reservists, whether you are in the Standby, High Readiness or any other Reserve-type service.
If you do not complete a year of effective service, this could impact on your DHOAS eligibility and entitlement. Please refer to Separation and Rejoining the ADF after a Break for further details.
If you are in receipt of a DHOAS subsidy and then reapply for a new DHOAS Subsidy Certificate after an extended break in effective Reserve service, you need to be aware that the rejoining provisions may impact on your entitlement. This could result in you dropping to a lower Subsidy Tier level, or shorten the length of your entitlement.
You may need to determine if it is better in your circumstance to continue receiving your current DHOAS subsidy (on your existing eligible DHOAS home loan) than it is to reapply, and possibly impact on your future entitlement.
You are advised to contact DHOAS before making any significant changes to your DHOAS subsidy arrangements.
Accessing your DHOAS entitlement
Once you have completed your initial qualifying period, you can accrue entitlement to DHOAS as long as you serve in the ADF (up to a maximum of 20 years without warlike service and up to 25 years with warlike service.)
Once you start receiving the DHOAS subsidy, you stop adding to your accrued entitlement. Any remaining entitlement ("Service Credit") you have to DHOAS you can access after you separate from the ADF.
For example, you are a current serving member and you've been in the Reserves for 14 years. Subtract your eight year qualifying period and you have six years of accrued entitlement to DHOAS.
If you start accessing your DHOAS subsidy today, you will be able to continuously accrue then access your entitlement to DHOAS while you serve in the ADF (and have an eligible DHOAS home loan).
Then, after you separate, you will be able to continue to access the DHOAS subsidy for another six years, using the entitlement you had already accrued before you started accessing the subsidy payments.
Your accrued entitlement may be extended if you complete warlike service.
In total, you can only access DHOAS for up to a maximum of 20 or 25 years.
Access to Lump Sum
You may wish to convert your accrued entitlement to DHOAS into a lump sum. Please see Subsidy Payments and Lump Sum.
Access to DHOAS after separating
If you have an eligible DHOAS home loan, you can access your accrued DHOAS entitlement after you separate from the ADF.
You will be able to receive DHOAS assistance for as long as you have an accrued entitlement.
For example, if at separation you've been a Reservist for 18 years service, you will have 10 years accrued entitlement (which is your total years of service minus your eight year qualifying period). (You will also have additional entitlement if you have completed warlike service.)
You will be able to receive DHOAS assistance for 10 years after you separate.
Whether or not you access your DHOAS entitlement immediately or at a later date, or whether you access it before or after separating from the ADF, it does not impact on the length of time that you can receive DHOAS.
However, members should be aware that if you have not completed more than 20 years of service at the time you separate from the ADF your remaining DHOAS entitlement will be paid at the Tier 1 level, even if you've completed the minimum years of service required for Tier 2 and Tier 3 benefits.
If you have completed over 20 years of service at separation you will receive Tier 3 subsidy payments.
You are entitled to one Subsidy Certificate after discharge, and you must apply for it within two years of discharging. We would suggest that you apply for a Subsidy Certificate before discharging (if you can use it within 12 months), so that your post-discharge Certificate can be accessed at a later date if necessary.
If you are making instalments on a construction loan and you have discharged, you may wish to defer applying for your one post-discharge Subsidy Certificate until construction is complete.
Please note that you must access your accrued DHOAS entitlement within two years of when you cease to be a member of the Permanent Forces or an active member of the Reserves, whichever is the later, or you will forfeit your entitlements if you do not rejoin the ADF.
If you are already in receipt of a DHOAS subsidy and you discharge from the ADF, you must advise DVA using the Change of Circumstances form.
What benefits can I receive?
The amount of your monthly DHOAS subsidy payments will depend on your eligible Subsidy Tier, and on the amount you borrow up to your subsidised loan limit.
You may opt to receive a lump sum payment (in addition to your monthly subsidy payments), if you have accrued sufficient entitlement to DHOAS to convert into a lump sum and you meet certain criteria.
Subsidy tiers
You will be eligible under one of three subsidy tiers. The longer you have served the higher tier level you will be eligible for:
- Reservists who have completed a minimum of eight years but not more than 12 years are eligible under Tier 1
- Members who have completed 12 years but not more than 16 years are eligible for Tier 2
- Members who have completed a minimum of 16 years are eligible for Tier 3
When calculating your subsidy tier level, you need to count your total years of service in the ADF. Do not subtract your qualifying period of eight years (as you do if you're working out your accrued entitlement).
For example, if you started in the Reserves in 1998 and have served each year since then, you have completed 10 years of service. That means you are eligible to receive Tier 1 benefits.
For discharging members, if you've served for over 20 years at the time of separation you'll receive your subsidy at the Tier 3 level. If you've served less, you'll receive your subsidy at the Tier 1 level.
New monthly subsidy payments are calculated on the subsidised loan limits that are valid as at the month when your first subsidy payment period commences. If your first subsidy payment period starts from or after July 2010, refer to the Subsidy Tier table below which shows subsidy values that are valid for 2010-11.
If your DHOAS assistance commenced prior to 1 July 2010, your subsidy payments are calculated on 2009-10 Subsidised Loan Limits.
If your DHOAS assistance commenced prior to 1 July 2009, your subsidy payments are calculated on 2008-09 Subsidised Loan Limits.
Table of Subsidy Tiers for 2010-11
Minimum Service | Subsidy Tier | Subsidised Loan Limit | Maximum Monthly Subsidy |
| 8 years | Tier 1 | $197,773 | Up to $281 |
| 12 years | Tier 2 | $296,659 | Up to $422 |
| 16 years | Tier 3 | $395,546 | Up to $562 |
- This table shows the 2010-11 Subsidised Loan Limits. Your new subsidy will be calculated on these subsidised loan limits if your first payment period starts from or after July 2010. If your first payment period started before 1 July 2010, see 2009-10 Subsidised Loan Limits or before 1 July 2009, see 2008-09 Subsidised Loan Limits.
- Monthly subsidy values are based on the August 2010 median interest rate.
Monthly payments
Your eligible tier determines your subsidised loan limit, which is the portion of your home loan that will attract a DHOAS subsidy.
Your monthly subsidy payment is based on the amount you borrow up to your subsidised loan limit.
If you borrow an amount that is equal to or greater than the subsidised loan limit in your eligible tier, then you will be entitled to payment of your tier's maximum monthly subsidy.
For example, if you're eligible under Tier 2 and you borrow equal to or more than $296,659 (representing your subsidised loan limit) you will receive the maximum subsidy payable of $421 per month (as at August 2010).
This is because the maximum monthly subsidy is calculated on the maximum subsidised loan limit, in each tier. In your case, this is $296,659.
If you borrow an amount that is less than your eligible loan limit then you will receive a subsidy on the full amount of your loan. Your subsidy will be less than the maximum monthly subsidy payable.
For example, if you're eligible under Tier 2 and you borrow $250,000 (whish is less than your $296,659 subsidised loan limit), you would receive $355. This is the maximum subsidy payable on $250,000 (at present).
All DHOAS subsidy amounts are calculated using the same DHOAS formula.
The formula is 37.5% of the interest incurred on your eligible home loan, over 25 years (this is regardless of your actual home loan period.)
A median interest rate, based on the rates of Australian home lenders, is used to calculate the interest incurred on all DHOAS home loans. The actual interest rate on your home loan is not used.
For the DHOAS formula, the median interest rate is capped at 8.95%. Under this maximum, the rate used can fluctuate in line with interest rates changes and impact on your monthly subsidy payment amounts.
Example - Tier eligibility
A member has completed 13 years of consecutive, efficient Reserve service. Given they have completed a minimum of 12 years of service, but not more than 16 years, they are entitled under Tier 2.
Service Years | Eligible Tier | Loan Limit | Maximum Monthly Subsidy |
| 13 years | Tier 2 | $296,659 | Up to $422 |
Example - Subsidy payment amount
A member has completed nine years of Reserve service and is eligible under Tier 1. This tier has a maximum loan limit of $197,773. The member takes out a home loan of $250,000. Given the home loan is equal to or greater than the loan limit in Tier 1, the member is eligible to receive the maximum subsidy of $281 per month (as at August 2010).
Then the member completes enough service to move up to the next Tier. Tier 2 has a maximum loan limit of $296,659.
Given the original home loan of $250,000 is not equal to or greater than the Tier 2 loan limit of $296,659, the member will not receive the maximum subsidy amount of $422. However, the monthly subsidy will increase to $355 (see Your Subsidy Payments).
| Eligible Tier | Loan Limit | Loan Amount | Less or Greater? (Than Loan Limit) | Actual Subsidy
|
| Tier 1 | $197,773 | $250,000 | Greater | $281 |
| Tier 2 | $296,659 | $250,000 | Less | $355 (not max $422) |
Changes to Subsidy Amounts
Your monthly subsidy payments may fluctuate in line with interest rate changes.
The median interest rate that is used to calculate your monthly subsidy payments can change in line with changes in home lending interest rates - up to the capped rate of 8.95%.
This means if interest rates go down, your monthly subsidy will also decrease.
A decrease in the median interest rate results in a reduction in the maximum monthly subsidy values, and in the payments made into members' DHOAS home loans.
If interest rates go up again, so too will your subsidy payment - but the interest rate used can only go up to the capped rate of 8.95%.
Interest rates are NOT capped at the rate they are when you take out your loan. The median interest rate is capped at 8.95% for all DHOAS home loans, regardless of when they've been drawn down.
Changes to Subsidised Loan Limits
Subsidised loan limits are reviewed at the end of each financial year, as required under the DHOAS Act 2008, and amendments are made based on changes to the Average House Price.
The subsidised loan limits for 2010-11 are used to calculate your DHOAS subsidy if your first payment period is from or after 1 July 2010. They do not apply to subsidies that are first paid in July 2010 but cover the payment periods of May or June 2010. In this case, your subsidy will be calculated on 2009-10 Subsidised Loan Limits.
Changes to the loan limits do not affect your subsidy assistance if your DHOAS home loan is already established and you're currently in receipt of subsidy payments.
The reason for this is that while the value of the house that you are buying may increase, the principal value of your loan will not.
The subsidised loan limits and the balance of your home loan, which are current in the month that your first subsidy payment covers, will remain applicable throughout the life of that home loan for the purpose of working out your DHOAS subsidy payments.
This applies unless you stop then restart your DHOAS assistance. In this case, the Subsidised Loan Limits and home loan balance that are current at the time you restart your DHOAS subsidy payments will apply to determine your subsidy, not your original draw down loan amount or previous years' loan limits. This may result in receiving a smaller subsidy payment than you did prior to the halt in DHOAS.
Lump sum
Some members may opt to convert their accrued DHOAS entitlement into a lump sum. The conditions for accessing the lump sum are that:
- You have accrued entitlement that you can convert into a lump sum payment. That is, you have completed your qualifying period of eight years and in addition, you have completed further service to gain a Service Credit.
- You must retain sufficient service credit to support on-going monthly DHOAS subsidy payments.
- You have not previously owned a home, either to live in or as an investment, whilst serving in the ADF. (You can own an interest in non-residential property).
- The lump sum will not be paid on a residential property bought before a person is given the Subsidy Certificate that is the basis for the lump sum request. This prevents a person getting the lump sum where they have only owned the one property, but bought it some time previously.
- You (and/or your family) need to live in the home for at least 12 months from the time you access the lump sum.
- There is a reasonable expectation you will continue to serve for at least another 12 months
You can only convert up to a maximum of four years, or 48 months, of service credits into a lump sum.
For the purpose of calculating the lump sum, the Tier 1 maximum monthly subsidy amount is used (even if you're entitled under a higher subsidy tier). This reflects the purpose of the incentive to purchase a first home while your in service.
For example, you are a Reserve member who has 14 years of service. Subtracting your eight year qualifying period, you have six years of accrued entitlement.
You can convert up to four years of this entitlement into a lump sum payment. It would be the equivalent of 48 x Tier 1 subsidy payments.
Currently the maximum Tier 1 subsidy is $281.47 per month. Therefore, for example, if you convert four years, you will receive 48 x $281.47 = $13,510.56.
Please note: If interest rates fluctuate, the amount of the payable lump sum will change.
Payment of lump sum
Please note the lump sum is not paid to you before or on settlement of your property, and cannot be used as a deposit to purchase your house.
You will receive your lump sum and your first DHOAS subsidy after your home loan provider advises DVA that you have drawn down your loan and we process your payment.
Payments are made at the start of each month, and cover the month prior (or two months prior depending on the date of your home loan draw-down).
For example, if you draw down your loan in August, you will receive your lump sum and first subsidy payment in early October. This will be for the month of September (and possibly for August). DVA will send you a letter informing you of the subsidy arrangements and lump sum payment.
Your monthly subsidy payments and the lump sum
After payment of your lump sum, the remainder of your accrued entitlement is paid to you in monthly subsidies, into your DHOAS home loan. These monthly subsidy payments are calculated using your eligible Tier level (which maybe higher than Tier 1).
The years of entitlement that you convert into a lump sum are counted towards your total accrued entitlement period for DHOAS of up to 20 or 25 years (depending on warlike service).
For example, if your maximum accrued entitlement to DHOAS is 20 years (after you've subtracted your qualifying period), you can convert four years into a lump sum and then receive a monthly subsidy for 16 years (into a DHOAS home loan). Your monthly subsidy is paid at your eligible Tier level.
Effective Reserve Service and Subsidy Payments
Reservists should be aware that you will not accrue a year of entitlement to DHOAS until you have actually completed the 20 days of Reserve service within the financial year (required for "effective service" to accrue DHOAS entitlement).
Therefore, if your current DHOAS service credit is expended before you can complete the required service to accrue further entitlement, your subsidy payments will cease. The subsidy will not be paid in advance of you completing the effective service, on the assumption that this will occur alter in the year.
Your subsidy payments can resume once you undertake the effective service, as long as all other DHOAS conditions can be met.
Please note that you don't have to wait until the end of the financial year to accrue the entitlement, if you complete the 20 days earlier in the year then you will be granted the additional DHOAS service credit at that date. For example, if your 20th day of Reserve service within the 2010-11 year is completed by 1 September 2010, you will accrue your one year of entitlement on 1 September 2010 (not 30 June 2011).
Effective Reserve Service and Inadvertent Separation
If you are a Reservist and you do not complete effective Reserve service within a financial year you will be deemed to be separated for the purpose of DHOAS. "Effective" Reserve service is defined as at least 20 days of active Reserve service within a financial year.
For the purpose of DHOAS, this requirement to complete at least 20 days of active service to not be deemed to be discharged applies to all Reservists, whether you are in the Standby, High Readiness or any other Reserve-type service.
If you do not complete a year of effective service, this could impact on your DHOAS eligibility and entitlement. Please refer to Separation and Rejoining the ADF after a Break for further details.
Transferring from Permanent Force to Reserves - Avoid Being Deemed Separated
For the purpose of DHOAS, Reserve service is completed in financial years whereas Permanent service is completed in calender years. "Effective" Reserve service requires at least 20 days of Reserve service within a financial year.
If you have already applied for DHOAS and you're currently receiving a monthly subsidy, you need to ensure that you complete at least one day of Reserve service within the financial year that you leave the Permanent Force, to maintain your DHOAS entitlement. For example, if you leave the Permanent Force in August 2010, you will need to do some Reserve service before 30 June 2011.
This is to establish your status as a Reservist and to ensure you're recognised as a serving member for the remainder of the financial year after you leave the Permanent ADF. This applies to all Reservists, regardless of whether you're in the Standby, High Readiness or other type of Reserves.
Otherwise, for the purpose of DHOAS, you will be deemed to be separated from the ADF. Your status as a serving member will not be able to be reinstated until the following financial year, after you have completed at least 20 days of Reserve service within that year. This could impact on your DHOAS entitlements.
Separated members receive their DHOAS subsidy payments at the Tier 1 level if they have not completed 20 or more years of service at the time of separation. This is even if they were eligible to receive their subsidy at the Tier 2 or 3 level prior to separating.
Therefore, if you're deemed separated from the ADF because you have not established your status as a Reservist, your subsidy payments could be reduced (until such time as you complete effective Reserve service).
Exemption Based on Exceptional Circumstances
Members who do not complete effective service for the purposes of DHOAS (up to 20 days of Reserve service within the financial year) may apply to the relevant DGPERS for an exemption based on exceptional circumstances.
In general, "exceptional" circumstances would not include, for example, maternity leave or study leave.
Members are advised to discuss a request for an exemption with their chain of command before submitting a request.
Postal addresses for DGPERS
DGNPT Director General Navy Personnel and Training: R8-1-016, Russell Drive, Canberra, ACT 2600
DGPERS Director General Personnel - Army: R8-9-025, Russell Drive, Canberra, ACT 2600
DGPERS Director General Personnel - Air Force: R8-0-019, Russell Drive, Canberra, ACT 2600