Defence Service Homes loans

Last updated: 
5 December 2019

What is on offer

The subsidy offers a reduced interest rate on $25,000 of a home loan for 25 years through an interest rate reduction. DVA covers the interest rate gap directly with Westpac Bank.

You are able to choose whether to have the entire home loan with Westpac or the amount not subsidised with another lender.  

Who can get it

You may be eligible for a Defence Service Home (DSH) loan if you:

  • first enlisted before 15 May 1985 and completed operational service
  • served on or after 1972 and performed 3 years of continuous effective full-time service or completed your National Service obligation
  • first enlisted on or after 17 August 1977, before 15 May 1985 and completed more than 6 years of effective continuous full-time service
  • were discharged before 7 December 1972 and served in World War 2, Korea/Malaya or an operational area outside Australia
  • are a surviving partner of an eligible former Defence member, or
  • served any operational service in Namibia

You may also be eligible if you:

  • served with other British Commonwealth forces (before 28 May 1963) or the merchant marine, subject to meeting specific requirements
  • are the parent of a deceased former Defence member
  • served as a member of an approved welfare organisation with the Australian Defence Force outside Australia

You may not be eligible if you:

  • were discharged because of misconduct or misbehaviour
  • own another property (in addition to your home)
  • if you revoked your entitlement in favour of the Defence Home Assistance Scheme (DHOAS) or Defence Home Owner Scheme (DHOS)
  • are a widow/er and remarried

What you can get

The subsidy is paid monthly in the form of a reduced interest rate on your loan. The maximum loan available is $25,000 over a maximum term of 25 years. The interest rate on the loan is capped at 6.85% per year. However, the actual interest rate on the loan is based on an average monthly interest rate of all market lenders, calculated monthly, less 1.5%.

Your DSH loan can be used to:

  • buy or build a house or unit
  • complete, enlarge, modify and/or repair your house or unit
  • buy the right of entry into a retirement village
  • refinance an existing mortgage
  • build, complete, modify or repair your retirement village accommodation if the retirement village you choose meets Westpac's acceptable security requirements
  • obtain granny flat accommodation on another person's property (in this situation, you must assign the loan to the owner of the property. You will also need to apply for a Certificate of Assignment)

How you can claim

  1. Establish your eligibility by submitting a discharge certificate with your application form.
  2. Take your certificate of entitlement to a Westpac branch.
  3. Meet Westpac’s lending criteria.

Important information

  • The DSH loan is able to be transferred to different homes, you can close your loan upon sale and reapply for your remaining entitlement.
  • Generally Westpac require first mortgage security.
  • Westpac can complete a substitution of security which swaps the loan from one property to the other (this must be completed as your old property is being sold and the new home is being bought).
  • Two or more eligible applicants could pool their entitlements for the same property.

What you need to tell us

You need to tell us if:

  • a partner or other person is to be added or be removed as a party to the loan.
  • the property is used for business purposes.
  • a significant change to the property including renovations or destruction.
  • the borrower dies. 
  • you change your name.