Buying your first home can feel out of reach, especially when you're trying to save a deposit while managing everyday expenses. The Australian Government's Help to Buy Scheme has been introduced to help eligible Australians enter the property market sooner by reducing the amount they need to borrow.

 

The scheme works through a shared equity arrangement. Rather than lending you money, the Australian Government contributes up to 40% of the purchase price for a new home or up to 30% for an existing home. In return, the government holds an equivalent ownership share in the property.

 

Eligible buyers are only required to contribute a minimum 2% deposit, and because you're borrowing less from the lender, your mortgage repayments may be lower than they would be with a traditional home loan. Lenders' Mortgage Insurance (LMI) may also be avoided, depending on the loan structure.

 

To qualify, applicants must meet eligibility criteria, including income thresholds, property price caps and residency requirements. Places in the scheme are limited each year, so not everyone who is eligible will automatically receive a place.

 

As your financial circumstances improve, you can choose to buy back some or all of the government's equity share over time. If you eventually sell the property, the government receives the same percentage of the sale price as its original ownership share. This means if your home's value increases, the government's share increases proportionally. Likewise, if the property's value decreases, the government's share also decreases.

 

The Help to Buy Scheme can be a valuable option for eligible buyers who have a steady income but are finding it difficult to save a large deposit or meet borrowing requirements. However, it's important to understand both the benefits and the long-term implications before deciding if it's the right choice.

 

A mortgage broker can help you determine whether you're eligible, explain how the scheme compares with other government initiatives, and guide you through the application process to find a home loan that suits your circumstances.

 

If you'd like to find out if you qualify, contact us today for an obligation-free assessment and we'll help you explore your options.