Housing affordability was one of the key battlegrounds of the federal election last month. So, the new Labor Government is proposing to assist first home buyers break into the property market by introducing what is effectively a shared equity scheme.
Eligible first home buyers would need to have saved a minimum deposit of 2%, and the scheme would be limited to individuals earning less than $90,000 or couples earning $120,000. Under the scheme, which would be capped at 10,000 spots each year, the government would own the relevant percentage of the dwelling which you have the option to buy back in 5% reductions over time.
Who Is Eligible For The Help To Buy Scheme?
| Criteria | Eligibility Requirements |
| Income | Individual gross income must not exceed $90,000 a year
Gross income for couples applying together must not exceed $120,000 a year
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 If income exceeds the maximum allowed for two consecutive years, participants will have to repay the government’s financial contribution in part or whole, as their circumstances permit. |
| Property ownership and residency | Must be a first-home buyer with no land or property under your name in Australia or overseas
Property purchased through the scheme must be participants’ primary residence |
| Age and citizenship | Must be at least 18 years old
Must be an Australian citizen Permanent residents aren’t eligible |
| Deposit and other expenses | Minimum deposit 2%
Participants must pay legal costs, conveyancing fees, stamp duty, and any related taxes or expenses |
| Type of housing | Participants can purchase a new or existing home that is one of the following types:Stand-alone house
Semi-detached house Duplex Townhouse Unit |
| Other requirements | Must pass the serviceability test of the lender and qualify for a home loan |
How Much Will I Save?
The savings on a property through the scheme will depend on the property’s price. Based on the price cap for different locations, a 40% equity contribution from the government for purchasing a new house can save you anywhere from $120,000 to $380,000. A 30% equity contribution from the government to purchase an established home can save anywhere from $120,000 to $285,000.
The chart below shows price caps for properties in different locations and the maximum the government would pay under the scheme, based on the property type.
Even if you don’t qualify for the scheme, there are other programs for you to choose from, including the following:
- If this is your first home, there are other schemes and government grants for home buyers, including the first home guarantee.Here’s a comparison between the Help to Buy and First Home Guarantee Scheme.
- You can apply for a guarantor home loan, which helps you borrow up to 105% of the security’s value.
There are also no-deposit and low-deposit home loans available.
With limited places available, competition for a spot in this scheme is sure to be fierce. Don’t delay! Discuss your situation with our mortgage brokers today, and we’ll find the best home loan scheme for your situation.
Article Supplied by Scott Heathwood of https://www.wealthyandwise.com.au
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