What is the Help to Buy Scheme?
In a previous news post, we introduced the Australian Government’s 5% Deposit Scheme. This time we’re taking a look at the Help to Buy Scheme.
The Help to Buy Equity Scheme is another Australian Government initiative to help Australians into homeownership. It allows you to purchase a new home by sharing a stake (equity share) with the Government. The Government’s equity share in your new home works like you are going into purchase the home together and therefore share in the initial costs of purchasing the home.
Can I buy a house with a 2% deposit?
The shared equity scheme is targeted towards lower income earners and assists them getting into homeownership in two ways;
1. The scheme acknowledges that saving a standard 20% deposit is increasingly difficult for new home buyers. The scheme addresses this by accepting a lower upfront deposit as low as 2%.
2. The second way the scheme assists home ownership is through lower mortgage repayments throughout the life of the loan. This lowers the burden of home ownership and makes these individuals less susceptible to interest rate rises and mortgage stress.
However, it is important to note, because of these advantages, the scheme has stricter qualifying criteria and Help to Buy property price caps.
What are the Key Considerations?
When you buy a home through the Help to Buy Scheme, you will own the home but share some of the value with the Government. As the Australian Government has contributed to purchasing the property, the Government will proportionally share any gains or losses made when you sell your home or when you buy out the Government’s equity share.
You are able to buy out the government’s share in your home at a later date or this amount can be repaid if you sell the home.
Under Help to Buy you will need to:
- save a minimum 2% deposit
- obtain a home loan from a Participating Lender.
The Australian Government will:
- contribute up to 30% (existing homes) or 40% (newly built homes) toward the purchase price.
This will allow you to buy a home sooner by:
- bridging the gap between what you can borrow and the price of a home that suits your needs
- helping your deposit go further, enabling you to buy sooner.
Important Things to Note:
The Government maintains part ownership of your home.
The Government’s share is tied to the value of your home and will increase or decrease depending on the market conditions. The percentage of the Government’s share remains the same ( 30 or 40%) until it is repaid.
– Applications must be made through participating lenders
– Scheme Approval must be received first before purchasing any house or land package
– Must be a fully turnkey home (including driveway, landscaping, blinds and fittings etc)
– Building contracts must be a fixed contract
Help to Buy eligibility
Sound like it could be a good fit for you?
Let us put you in contact with a participating builder to check your eligibility. Before applying, it’s a good idea to speak with a lender or mortgage broker to confirm your eligibility and understand what property price caps apply to your area.
Check eligibility requirements or for more information – https://firsthomebuyers.gov.au/australian-government-help-buy-scheme
You can also learn more about the scheme on the Australian Government website here.
Interested in learning more? Contact our team for help buying your first home or to discuss if this scheme is right for you.
Phone 1300 983 889 or via email at info@banyanplaceofficer.com.au.
