Assistance under the DSH Act is only available in relation to properties located within the territorial boundaries of Australia including Norfolk Island.

A subsidised advance is available;

• up to an amount of $25,000,
• at a capped interest rate of 6.85%pa, but variable at 1.5%pa below the Benchmark Rate if the Benchmark Rate is below 8.35%pa.
• over a maximum term of 25 years,

The subsidised advance is available for the following purposes:-

• to buy a new or previously occupied home, including a strata unit;
• to buy land and build a home on it;
• to build a home on land the person already owns;
• to complete a partly built home the person owns. Under this criterion a subsidised advance may be provided for the installation of water, sewerage, electricity, drainage or gas including the connection of mains from some distant point to the boundary of the applicant's holding;
• to enlarge, modify or repair an existing home the person owns including retirement village accommodation;
• to pay the entry charges to a retirement village;
• to re finance an existing mortgage on a home.
• to re finance a debt, owed by the person in relation to the person's retirement village accommodation.
• to assist the person to obtain a right of residence in a retirement village in the case of an assigned advance.

3.3.2.1 Enlargement.  Under this term the predominant purpose of the loan and the bulk of the cost must be associated with increasing the internal floor space of the house.  In circumstances where there are renovations or repairs associated with the enlargement but the renovations or repairs are not the main cost factor, the certificate should be issued for enlargement.

3.3.2.2 Modification.  This term is to be used where the predominant purpose of the loan does not involve increasing the internal floor space of the home.  However, incidental increases to the size of the home such as the enclosure of existing sleepouts or the installation of a bay window would be included in this definition.  They are modifications in that they change the purpose for which an existing area is used.  This definition also covers such things as :

• renovation of existing facilities such as kitchens and bathrooms;
• changing the purpose of a room such as converting a store to a living area;
• other internal modifications such as removing walls, adding windows etc.;
• other works which do not increase the internal living area of the home eg garages, decks, pergolas etc.

3.3.2.3 Repairs.  This term covers making good something which is in a state of disrepair.  This includes replacing something which is defective.

3.3.2.4. Assignment.  This provision may be used when the provider of the accommodation is a retirement village managed by an organisation whose prime purpose is to provide accommodation to veterans and veterans' widows (although it is extremely unlikely that a retirement village organisation would accept assignment of a loan), or is an individual who can provide satisfactory security or who will provide granny flat type housing.  The advance will be assigned to the provider (the "assignee") who will assume the legal responsibilities for the advance.  Loans for this purpose are not subject to the DSH lending criteria specified in Schedule C to the Agreement, but rather the Bank's normal lending criteria for loans of this type.

An additional advance may be approved for an existing borrower, who has not borrowed the current maximum amount available under the legislation in respect of the property.

An additional advance may be approved for the following purposes:-

• to enlarge, modify or repair a person's home or retirement village accommodation;
• to pay road making charges;
• to re finance an existing mortgage on the home. 
• to re finance a debt, owed by the person, in relation to the person's retirement village accommodation.
• to assist the person to continue holding a right of residence in a retirement village in the case of an assigned advance.

An additional advance is subject to the usual conditions concerning the granting of initial or further advances, ie the tests of eligibility, ownership and occupation have to be met.

3.4.3.1. Assignment. An additional advance may only be assigned where the current initial or further advance has been assigned.  This provision may be used to assist a person to continue to hold a right of residence in a retirement village.  The advance will be assigned to the provider (the "assignee") who will assume the legal responsibilities for the advance.

The underlying principle and general intent of the legislation is that eligible persons should have once only access to the maximum loan amount of $25,000, either by way of an initial advance or in combination with subsequent additional advances and/or further advances. The amount of an additional advance is therefore restricted to an amount necessary to fulfil the purpose for which the additional advance is made, but not more than the amount calculated under the following guidelines.

• The difference between $25,000 and the total of the initial or further advance and any previous additional advance made to the person.  In deciding whether to use the amount of the initial or one of a possible number of further advances in this calculation, delegates are to apply whichever amount that provides for the client to gain equitable once only access to the maximum loan amount.  Once having gained that access, no residual is available. [Please see examples at Appendix B at the conclusion of the Entitlement GO's.]  It is stressed that the amounts of advances referred to in these calculations are the amounts actually advanced and not the current outstanding liability.

The interest rate on new additional advances is capped at 6.85%pa, but variable at 1.5%pa below the Benchmark Rate if the Benchmark Rate is below 8.35%pa.

An additional advance is written over the remaining term of the existing DSH advance, unless the Secretary or delegate determines that a longer term would be appropriate having regard to the circumstances of the case.

Sub-clause 11.20 of the Agreement allows the Bank to 'top-up' an existing Subsidised Advance Loan Account with a new Additional Advance.  This is possible only where the interest rate and terms of both loans are compatible.  Reference to this facility is to be included on the Additional Advance certificate of entitlement where appropriate.  These arrangements could have fees implications for borrowers.

A further subsidised advance is:

• available for the same purposes and on the same conditions as a subsidised advance;
• restricted to an amount equal to the limit of the previous subsidised advance;
• to have an interest rate or interest rates that applied to the last preceding previous advance or advances; and
• to have the balance of term or terms that applied to the last preceding previous advance or advances.

NOTE:  If the previous advance was not current on 9 May 1995, the total used terms of previous advances must not have exceeded 25 years as at that date.

NOTE:  Please see Ent GO 3.5.5 for further details re interest rates applicable.

An applicant is able to apply for DSH assistance when moving from home to home on any number of occasions while ever there is an amount available as a 'limit' on the immediately preceding advance and an unused balance of term as described in Ent GO's 3.5.1 and 3.5.6.  There is no time restriction on the lodging of an application for a further subsidised advance.

A certificate of entitlement  may be issued by a delegate, once the eligible person meets the entitlement criteria.

NOTE: Sub-clause 11.2A of the Agreement provides for the continuation of subsidy for up to six months after the sale of a home where the borrower intends to acquire another home with DSH assistance within six months of the sale.  In these circumstances the application for, and issue of, another certificate of entitlement is not necessary.  These arrangements could have fees implications for the borrower.

An amount equal to the limit of the last Corporation advance, subsidised advance or contract of sale in relation to which the person was a borrower or purchaser or $25,000, whichever is less.  In working out the limit, the last advance is to include the amount of any additional advance that has subsequently been made to the person.  In summary, where a client with:-

(a)an initial advance has received an additional advance/s, the amount available for portability is the lesser of $25,000 or the sum of the limit of the initial advance when discharged and the limit of the additional advance/s when discharged;

(b) a further advance has received an additional advance/s, the amount available for portability is the lesser of $25,000 or the sum of the limit of the further advance when discharged and the limit of the additional advance/s when discharged.

The limit as defined in the Agreement with the Bank which forms Schedule 1 to the Act is the original amount lent to a Borrower as that amount is:

(a) increased by:

the amount of all Loan Maintenance Fees debited to that Borrower's Subsidised Advance Loan Account; and

the amount of all taxes or duties on receipts or payments to or from that account (including without limitation financial institutions duty) which are debited to that account; and

(b) reduced by any scheduled repayments of principal and payments of Loan Maintenance Fees (whether these repayments or payments were made or not); and

(c)increased by any amount of Instalment Relief granted by the Bank pursuant to a Certificate of Entitlement.

The amount of any further advance, would of course by definition in Section 4 of the Act, exclude the amount of any widow/widower advance or an advance for essential repairs.

The capped interest rate on a further advance is that interest rate or interest rates that applied to the last advance or advances that preceded the application for further subsidised assistance, but disregarding the 1.5 per cent reduction off the Benchmark Rate (the 'Reduced Benchmark Rate') provided for in section 35AA of the Act.  Having set that rate as the capped rate to apply to the further advance, section 35AA is then applied if that rate exceeds the 'Reduced Benchmark Rate'.  The certificate of entitlement is to contain a statement setting out the effect of section 35AA.

Where the last advance was a tiered loan which had been discharged before 5 January 1998, the capped interest rate on any further advance is to be the 'collapsed effective rate' of that loan in accordance with Sub-section 34(2A) of the Act, again disregarding the 1.5 per cent reduction off the Benchmark Rate (the 'Reduced Benchmark Rate') provided for in section 35AA.  Having set that rate as the capped rate to apply to the further advance, section 35AA is then applied if that rate exceeds the 'Reduced Benchmark Rate'.  The certificate of entitlement is to contain a statement setting out the effect of section 35AA.

The term of a further advance is the balance of the term or terms which applied to the last previous advance or advances that preceded the application for further subsidised assistance.

NOTE:  If the previous advance was not current on 9 May 1995, the total used terms of previous advances must not have exceeded 25 years as at that date.

An eligible person may be joined in the advance by his/her spouse or de facto partner.   Subsidised advances may be allowed in the joint names of an eligible person and spouse or de facto partner provided they hold the land for which the advance is made as joint tenants.

3.6.1.1Purchase of equity in property. Applications to purchase equity in a property are to be processed as applications to 'buy'.  Should the other owner not be a spouse or de facto partner of the applicant, ownership will need to be as a tenant in common and subject to the equity rule in section 17A(2) of the Act.  Where the property is already subject to a DSH subsidised advance, the existing borrower will need to apply for a transfer certificate under section 22 in addition to the purchaser's application.  Where the existing borrower is ineligible (ie an ineligible transferee before 8/1/91) the subsequent transfer application is to be refused.  Where the existing eligible owner is the spouse or de facto partner of the current applicant, the parties will have a choice of either joint tenancy or tenancy in common.  (Please also see Ent GO 3.6.4 below).

Two eligible persons may pool their DSH entitlements on the one property provided they are spouses or de facto partners. Such advances are available to each applicant on the same terms and conditions as is appropriate to their individual status.  Applications received from eligible persons who are not spouses or de facto partners can only proceed where the title is to be held as tenants in common.  (Please also see Ent GO 3.6.4 below).

Two or more nurses who come within the paragraphs (b) and (d) of the definition of 'Australian Soldier' may be assisted in respect of a building to be used as a hospital, sanatorium or nursing home.  The assistance may be made to one such person or to two or more such persons jointly (either as joint tenants or as tenants in common).  In the case of two or more persons the subsidised advance shall not exceed the sum of the amounts which could have been made if a subsidised loan had been made to each of those persons separately.

An eligible person may be issued with a certificate of entitlement for a subsidised advance in respect of a holding which is held with another person or persons as tenants in common.  In order to ensure that there is no leakage of the eligible person's loan benefit to ineligible people, the value of the eligible person's tenancy must be at least equal to the amount of the subsidised advance.  An eligible person may hold as tenant in common with a spouse or de facto partner, or with any number of other persons, subject to the proviso regarding the value of the eligible person's tenancy.

Widows/widowers who are eligible on the basis of their own service as well as their spouse's or de facto partner's service are able to receive the benefits to which they would have been entitled had their spouses or de facto partners not predeceased them. ie they are allowed to "pool" the entitlements.  Two Certificates of Entitlement (each for a maximum of up to $25000 where neither entitlement has been used before, or the relevant limit balances where loans have been partly used) may be issued to a widow/widower where that person is both an eligible person in her/his own right and the widow/widower of an eligible person, provided that the widow/widower has not legally remarried at the time of determining eligibility on the widow/widower status.  Two separate but cross referenced Certificates of Entitlement should be issued if assistance is approved.

It is important that the widow/widower is counselled fully on her/his entitlements because the chance to obtain dual assistance is a once-only opportunity.  If she/he decides to take only one advance (ie. an advance is obtained on the person's own eligibility either as an Australian soldier or as a widow/widower), she/he would be unable to obtain the other advance at a later date.  This is because she/he will become a borrower otherwise than merely because she/he was a joint borrower with her/his spouse or de facto partner and therefore her/his circumstances would no longer satisfy the criteria for an initial advance as defined in Section 4 of the Act.  However, it is equally important to note that this rule does not apply in cases where the widow is eligible as a WWII ex-servicewoman as provided by subsection 4(2AA), nor to a 'veteran widower' of such a person, because of the special provisions contained in subsections 4(2AB) and 4(2AC) in relation to further and initial advances.

Where a married couple has pooled their entitlements and one of them dies, the survivor may receive two further advances.  Both further advances would be for the limits of the loans at the time they were discharged.  Again this is a once-only opportunity.

Eligibility GO 12.2.1 outlines three categories of widows/widowers in circumstances where their spouses or de facto partners have received assistance. The three categories are:-

(i) where an advance, taken out as joint tenants, was discharged prior to the death of the person on whose service the advance was granted;

(ii)where an advance, taken out as joint tenants, was current when the person on whose service the advance was granted died.  The widow/widower would then become the sole borrower through survivorship without using her/his own entitlement; and

(iii) where an advance was taken out by the now deceased person in his/her sole name.

A widow/widower in either of the first two categories has previously been a purchaser or borrower merely because she/he was a joint purchaser or borrower with her/his spouse or de facto partner and became such a purchaser or borrower on the basis that her/his spouse or de facto partner was an eligible person.  Therefore, such persons are included among those able to receive initial advances as defined in ss4(1).

For category (iii) widows/widowers, a property which is subject to a DSH loan is allowed to remain in the name of the estate.  Under these circumstances, a subsidy would continue to be paid without affecting the widow's/widower's entitlement.  It is not necessary to transfer the property to a surviving spouse or de facto partner for a subsidy to continue. If the property and the loan are not transferred, no entitlement is lost.  A widow/widower in category (iii) would become a borrower in her/his own right if she/he elected to transfer the property to her/his name as beneficiary and would therefore no longer be entitled to receive an initial advance.  As mentioned above, this rule does not apply to WWII ex-servicewomen covered by subsection 4(2AA), nor to a 'veteran widower' of such a person.

If the property and the loan is transferred, only the limit of the late spouse's or de facto partner's loan is then available for portability purposes.  There is no entitlement to another initial advance.  Where a client seeks a further advance, the normal provisions relating to further advances are to be applied.  Care should be exercised to establish whether the widow/widower has remarried since the original Certificate of Entitlement was issued- remarriage voids the status of a widow/widower.  Where a widow/widower has remarried, only a subsidised loan granted in respect of that person's own service may be taken into account for determining the amount of the further advance.

Most forms of ownership of other houses are barriers to eligible persons utilising their DSH entitlement until such time as they have disposed of their interest in them.  Reference to ownership as an exclusion to assistance is covered in Ent GO 3.7.5.  However, there are circumstances where certain forms of ownership do not result in bars to assistance and are therefore listed in this part of the General Orders as inclusions.  The details are:-

3.6.6.1 Permanently Separated Spouses or De facto Partners.  Where the applicant and spouse or de facto partner are permanently separated, the ownership of a house by the permanently separated spouse or de facto partner will not prevent the issue of a Certificate of Entitlement. The term 'permanently separated' applies to the circumstances where parties to a marriage have severed the marital relationship resulting in an evident breakdown of marriage. The applicant must complete a statutory declaration attesting to the significant factors supporting the claim. The permanent separation provision is included in the Act to ensure that those persons whose marriage has broken down, but who choose not to divorce, are not disadvantaged. It is important that each case be determined according to its circumstances but, as a general principle, a separation of more than twelve months will be regarded as permanent unless there are reasons to consider otherwise.

3.6.6.2 Ownership of a Combined Business and House.  Ownership of a property consisting of a combined business and residence by the applicant and/or the spouse or de facto partner of the applicant does not constitute ownership of another house for the purpose of the Act where documentary evidence shows that the use of the house portion of the property by the operator of the business (other than the applicant and/or spouse of the applicant) is a necessary incident to the operation of the business, and therefore is unable to be occupied by the applicant as a home.

3.6.6.3 Ownership of a House Subject to Exclusive Occupancy Rights or a Life Interest.  Where an applicant and/or the spouse or de facto partner of the applicant either solely or together own a house, and a life interest or an exclusive occupancy right is vested in another person, the interest in that house does not constitute ownership of another house providing the vesting of the interest was created by circumstances beyond the control of the applicant or the spouse, ie. by virtue of a Will or Court Order. If an interest in a house is divested by mutual consent or voluntary agreement (other than a trust) it is considered that the house is still owned by the registered owner.

3.6.6.4 Ownership of a House which is Subject of a Trust.  An applicant is not considered to be the owner of a house, even if he remains on the title document as the owner, where he has passed the beneficial ownership of the house by the creation of a valid declaration of a trust, to the beneficiaries of that trust. The delegate should ensure that only those trusts which are considered to divest the ownership and which are not revocable are recognised.

3.6.6.5 Ownership of Shares in a Company which Owns a House or Unit.  A company is a legal entity separate and distinct from its shareholders and a shareholder has no legal or equitable interest in land registered in the name of the company. As it is the company in which the entire legal and equitable interest is vested, ownership of shares in a company which owns a house or unit does not make a shareholder an owner of a house even where that person holds controlling shares in the company.

3.6.6.6 Ownership of a House which has been Sold under a Contract of Sale.  The execution of a binding contract of sale for a house, of which the applicant and/or the spouse or de facto partner are/is joint registered owners or sole owner, makes the purchaser the equitable owner of the property and assistance may be made available. However, a Certificate of Entitlement cannot be issued until the conditions in the contract have been complied with or where contemporaneous settlements of the sale of one home and the purchase of another with DSH assistance are to occur.[Entitlement GO 3.7.5.4 also refers]. When conditions in a contract have been complied with a certificate may be issued even though settlement may not yet have occurred.

3.6.6.7 Ownership of a House Situated Outside Australia and its Territories.  The Act has no application outside Australia and ownership of a house outside Australia and its Territories should be disregarded.

A subsidised loan is not available to purchase land solely.  However, where a client genuinely intends to proceed with the building of a home within a reasonable time and construction is to be completed within five years of settlement, a Certificate of Entitlement should not be refused merely because the advance will be applied initially to the purchase of the land only.  The decision should be based on consideration of both the intended purpose and the intention to occupy.  [Please also see Entitlement GO 3.7.6.]

A person who has been assisted under the Defence Service Homes Act 1918 and who discharged his/her liability prior to 9 December 1987 is not entitled to any further assistance unless assisted solely as a spouse.  Where the previous liability was discharged in the period immediately prior to 9 December 1987,  the date of registration of the discharge of mortgage should be ascertained to determine when the person ceased to be a borrower for the purposes of Section 19.  [NOI 42 of 6 September 1995 also refers.]

A person who has received assistance under this Scheme and who has not discharged his/her liability is not entitled to DSH assistance.  An exception may be made where, although the liability has not been repaid, the property has been returned to the administering department, or transferred to a family member.

A person who received money from the Commonwealth after 9 December 1987 by way of a cash grant instead of an advance under the Defence Service Homes Act 1918 or payment instead of such cash grant, received that payment on the written understanding that they would not be entitled to any further assistance under the Act.

Assistance will be not be granted where either the eligible person or spouse or de facto partner is the owner of a house other than the one which is the subject of the application.  In deciding whether ownership exists, two elements must be tested.  Firstly, the property must represent a suitable security for a loan having regard to the usual test - acceptable holdings, whether it is a house etc.  Secondly, the applicant or spouse or de facto partner if applicable must not own another house as either a single tenant or as a joint tenant, no matter who the other joint tenant(s) may be.  An interest should not be considered as ownership if it does not meet both elements of the test.  Although holding other property as a company shareholder or as a company title shareholder might satisfy the first part of the test, it would not be considered ownership under the second part.

Though joint tenants as between themselves have separate rights as far as outsiders are concerned, each is treated as the single owner of the entire property. A Tenancy in Common is co-ownership under which each tenant has a distinct interest in the property, though no one tenant has a right to possession of any particular part of the property.  A tenant in common could not as an individual, be regarded as the owner of another home, but rather is a person who has a share or interest in another home.  Ownership of another home as a tenant in common, even where the only other tenant in common is the applicant's spouse or de facto partner, would not constitute ownership in terms of subsection 18(2)(b) or (e).  Likewise ownership of shares in a company which owns another home does not make a shareholder an owner even where that person holds controlling shares in the company.  A company is a legal entity separate and distinct from its shareholders and a shareholder has no legal or equitable interest in land registered in the name of a company.  Notwithstanding that the legislation provides for assistance under company titles, a shareholder cannot be regarded as the owner of any property held in this way.

3.7.5.1 House.  As a general principle, a structure may be considered to have the status of a house if it is legally able to be occupied; it is, or will be, able to satisfy the reasonable tests of a house (eg. provides sleeping and living accommodation, and facilities for ablutions, cooking, laundering etc.); and the title is an acceptable holding as defined in the legislation.

3.7.5.2 Owner.  Includes any person who has purchased or contracted to purchase a house.  Generally, for the purposes of the legislation, an owner is a person having a complete legal or equitable interest in a house.  Thus properties in which the applicant and/or any proposed joint tenant of the applicant, share an interest with other persons as tenants in common will not result in refusal to grant assistance.

3.7.5.3 Ownership of another house by either the applicant's  spouse or de facto partner will result in a refusal to grant assistance. Where the applicant has both a  spouse and de facto partner, the delegate must be satisfied that neither of them owns another home.  Alternatively, if one of them owns a home, the Delegate must be satisfied that the applicant is permanently separated from that spouse or de facto partner.

3.7.5.4 Issue of Certificate of Entitlement.  A Certificate of Entitlement cannot normally be issued while the applicant or his/her spouse or de facto partner owns another home. Where the applicant owns another home which is to be sold, a Conditional Letter should be issued.  An exception to this general rule may be made where contemporaneous settlements of the sale of one home and the purchase of another are to occur.  Delegates are to exercise their discretion to ensure that clients are not disadvantaged in such circumstances.  Where the home being sold is a Defence Service home, the amount box on the C of E should show "see special information box".  The special information box might contain a statement along the lines of "amount of advance must not exceed the limit of the immediately preceding DSH advance/s, excluding any amount owing on essential repairs advances and/or widows'/widowers' advances."

A person must intend to use the house, which is the subject of the application, as a home for him/herself and dependants.  An exception is where nurses are being assisted to acquire a hospital, sanatorium or nursing-home.

3.7.6.1 Intention.  Whether there is a real likelihood of the intention being realised is a relevant consideration.  It would be expected that a decision to refuse to issue a certificate of entitlement would be based on facts that generally are not capable of any other conclusion.

3.7.6.2 Time Limits.  Whether the intention to use the house for the prescribed purpose will be met within a reasonable time is relevant to the genuineness of the intention.  What is a reasonable time will vary having regard to the circumstances of each case, but where a certificate is issued to buy land and build a home and the funds are used for the purchase of land with the intention of building, it is a requirement that the home is completed within five years from settlement of the loan.  Failure to complete construction of a house capable of being occupied within five years will result in cancellation of subsidy and a change in the rate of interest to the Bank's investment rates or alternative finance.  Clients should be warned of these possible implications in such cases.

The most common meaning of home as it is used in the legislation is a person's usual or habitual place of residence.  However, the term is capable of wider meaning and a house may be regarded as a home in some circumstances where there is not habitual or continuous residence.

Where a subsidy is being paid in respect of a person who becomes the spouse or de facto partner of another person who is also the beneficiary of a subsidy, the Secretary may cancel the subsidy in respect of one of the persons.  Cancellation of subsidy under this section of the legislation [ss.26.(4)], is discretionary and should not be taken as a matter of course.  [Please see Procedural GO 1.5 also].  The power to cancel subsidy has been in the legislation well before the insertion of the amendments allowing portability and the pooling of entitlements.  Presuming both parties met the entitlement criteria (ie did not own another dwelling etc) at the time they received their Certificates of Entitlement, action to cancel one of the subsidies would not normally be taken.

Section 47 of the DSH Act empowers the Secretary to provide a dwelling-house for the use of a person who is receiving or is eligible to receive, a pension under Part II of the Veterans' Entitlements Act 1986 and to whom Section 24 of that Act applies, ie the Special Rate (T&PI) or (Blinded) pension.

Assistance under this provision is rarely provided and would not involve the usual application for a Certificate of Entitlement.  If a request for such assistance is received, full details of the case should be forwarded to the DHOAS Administration Manager at an early stage.