The Help to Buy scheme
The Help to Buy scheme was first introduced by the Australian Labour Party and is a shared equity scheme that helps Australians buy their first home. The scheme aims to contribute up to 40% of the property house for a new build, and 30% for an existing property.
All you need is a 2% deposit, plus you don’t need to pay Lenders Mortgage Insurance, which is an insurance the lender takes out to insure itself against the risk of unrecovered loans. You also won’t need to pay rent on the part of the home the government owns, and you’ll have the opportunity to buy the government's share when you’re able to.
The scheme’s intention is to help with what has been a longstanding crisis in mortgage affordability.
Are there limitations?
There are a limited number of places each year, so it’s important to get your applications in early and provide all the necessary information.
Certain areas have price caps, so be sure to investigate what they are for your target areas, but the minimum number sits at around $400,000 with the highest sitting at $950,000. With a maximum contribution from the government, you could look at saving at least $120,000-$285,000 on your home.
Finally, because the government technically owns a portion of the property, they can claim its equity and any share of the capital gain if the home is later sold. However, the homeowners can buy additional stakes in the property when they’re able to.
Who’s eligible?
There are some limitations to the scheme, though most first time buyers will fall into each of these categories. If you’d like to take advantage of this scheme, you must meet the following criteria:
- You must be an Australian citizen
- You must be over the age of 18
- You must earn $90,000 a year or less. As a couple this becomes $120,000
- You will need to live in the house for at least 12 months
- You must not currently own any property or land
- You will need to pay stamp duty and all other home buying costs
- You will need to be approved for a home loan by a lender
- The price of your property must fall into the price cap for your region
How to apply
It’s always important to speak to a qualified broker before making big financial decisions, and that includes the Help to Buy scheme. There may very well be options available to you that better suit your circumstances.
You can speak to one of our brokers for more information and guidance.