Government Schemes and Initiatives
Home Loan Fundamentals
Government Schemes and Initiatives
Understanding the “Help to Buy” Scheme: A New Pathway to Home Ownership
06/12/2024
The dream of owning a home feels increasingly out of reach for many Australians, with rising property prices and the challenge of saving for a deposit creating significant barriers. To address this, the federal government is rolling out the “Help to Buy” scheme, a shared equity program designed to make home ownership more accessible.
Here's everything we know about the program so far and how it could benefit aspiring first-time home buyers.
What is the “Help to Buy” Scheme?
The “Help to Buy” scheme is a shared equity initiative that allows eligible Australians to purchase a home with
government assistance. Under the program:
- The government will contribute up to 40% of the purchase price for new homes and up to 30% for existing homes.
- Buyers can secure their home with a minimum deposit of 2%, significantly lowering the financial barrier to entry.
- Lenders’ mortgage insurance (LMI), a common cost for buyers with smaller deposits, will not be required under this scheme.
This program is aimed at reducing upfront costs and monthly mortgage repayments, making home ownership more achievable
for lower- and middle-income Australians.
Eligibility Requirements
To qualify for the “Help to Buy” scheme, applicants must meet specific criteria:
Income limits: Singles earning up to $90,000 per year or couples earning up to $120,000 annually are eligible.
Principal place of residence: The property must be used as the buyer’s primary home, not an investment property.
Government stake:Buyers agree to the government holding an equity share in the property.
Price caps:The scheme includes regional property price limits, ensuring support is targeted at affordable housing.
While the detailed eligibility criteria may vary depending on the property’s location and type, the program aims to
assist those struggling the most to enter the housing market.
How Does Shared Equity Work?
Under the shared equity arrangement, the government owns a percentage of the home. When the property is sold or the
homeowner wants to buy out the government’s stake, the equity share must be repaid based on the current market value.
For example:
- If the government contributes 30% of a home’s $600,000 purchase price, it owns a $180,000 stake.
- If the property is later sold for $700,000, the government would receive 30% of the sale price, or $210,000.
This model ensures buyers benefit from lower upfront costs while retaining the flexibility to regain full ownership over
time.
Recent Progress
The Help to Buy scheme cleared a critical hurdle on 26 November 2024, passing through the Senate after gaining the
support of the Greens. With the bill now set to move to the House of Representatives, it’s expected to pass due to the
Labor Party’s majority, paving the way for the program’s implementation in 2025.
Housing industry leaders have welcomed the program, citing its potential to help 40,000 eligible buyers enter the market
while addressing declining home ownership rates.
How the “Help to Buy” Scheme Could Benefit You
For many first-time buyers, saving for a deposit is the most significant obstacle to purchasing a home. The “Help to
Buy” scheme:
- Reduces upfront costs with a smaller deposit requirement.
- Eliminates LMI, potentially saving buyers tens of thousands of dollars.
- Lowers monthly repayments, as the loan amount is reduced by the government’s equity share.
These benefits create a pathway to ownership for those who might otherwise be locked out of the property market.
Things to Consider
While the scheme offers substantial advantages, shared equity comes with considerations:
Government stake:You’ll need to repay the equity share when selling or refinancing.
Limited places:The scheme will be capped, so eligible buyers should act quickly once it becomes available.
Eligibility constraints:Income and property price caps may restrict participation for some buyers.
Register Your Interest Today!
Excited about the possibilities of the Help to Buy scheme? Don’t miss your chance to take advantage of this transformative opportunity. At North Rocks Mortgage Solutions, we’re here to guide you every step of the way. To make sure you’re ready when the scheme is rolled out, register your interest with us now! Help to Buy Expression of Interest Form By registering, you’ll be the first to know about updates, eligibility requirements, and how to apply. We’ll help you navigate the process and secure your dream home sooner. Contact us today to learn more about how we can assist you in your journey to home ownership!
Help to Buy Scheme – Expression of Interest Form
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Eligibility Details
