Formula for calculating subsidy
All DHOAS subsidy amounts are calculated using the same DHOAS formula. It is 37.5% of the median interest expense on the subsidised portion of your home loan, over 25 years (this is regardless of your actual home loan period or home loan rate).
A median interest rate, based on the rates of major Australian home lenders, as advised by CANSTAR Pty Ltd, 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.
Median interest rate
On the tenth-last business day of each month, DVA reviews the median interest rate used to calculate the DHOAS subsidies for that month. If the rate changes, your subsidy payment will also change.
The amended subsidy payment for that month is deposited in to your DHOAS home loan at the beginning of the following month.
For example, we review the median interest rate on the tenth-last business day of December. We use this revised median interest rate to calculate your subsidy payment for that month. The December subsidy is deposited into your home loan account on the first business day in January.
You can calculate the median rate yourself by reviewing the list of standard variable home loan interest rates listed at www.canstar.com.au and identifying the median interest rate.
This can be done with the Excel formula 'Median', or by listing the rates from the lowest to the highest and selecting the interest rate positioned in the middle.