Tag: Australian home buyer grants and schemes

What is the Help to Buy Scheme?

In a previous news article, we introduced the Australian Government’s 5% Deposit Scheme. This time, we’re taking a closer look at the Help to Buy Scheme—a shared equity initiative designed to help more Australians achieve home ownership.

How does the Help to Buy Scheme work?

The Help to Buy Scheme allows eligible buyers to purchase a home with financial assistance from the Australian Government. Rather than lending you more money, the Government contributes an equity share towards the purchase price, either up to 30% for an existing home or 40% for a newly built home – like a house and land package in Tarneit!

You own and live in your home as normal, while the Government holds a proportional ownership share. You can choose to buy back the Government’s share over time, or it will be repaid when you sell your home.

Can I buy a home with just a 2% deposit?

One of the biggest barriers to home ownership is saving a large deposit. The Help to Buy Scheme is designed to make buying a home more achievable by reducing the upfront costs for eligible buyers.

With the scheme, you may be able to:

  • Purchase a home with a deposit from as little as 2%
  • Benefit from lower mortgage repayments because you’re borrowing less
  • Avoid paying Lenders Mortgage Insurance (LMI)

By reducing the amount you need to borrow, the scheme can help ease mortgage stress and make home ownership more affordable over the long term.

What are the key considerations?

When purchasing through the Help to Buy Scheme, you will own your home while sharing part of its value with the Australian Government.

Because the Government contributes towards the purchase price, it also shares proportionally in any increase or decrease in the property’s value. If your home’s value changes over time, the value of the Government’s equity share changes too.

You can gradually buy out the Government’s share overtime, or repay the remaining share when you sell the property.

As the Help to Buy Scheme offers significant financial assistance, eligibility criteria and property price caps apply.

What’s required?

To purchase under the Help to Buy Scheme, you’ll generally need to:

  • Save a minimum 2% deposit
  • Meet the scheme’s eligibility requirements
  • Obtain finance through a participating lender
  • Receive Help to Buy approval before purchasing your home
  • Purchase an eligible property that meets the schemes requirements

For newly built homes, the property must generally be completed as a turnkey home, including items such as the driveway, landscaping, window furnishings and other standard inclusions. Building contracts must also be fixed-price contracts. Chat to our Marigold Team for Turnkey Home Builder recommendations.

Why consider the Help to Buy Scheme?

The scheme is designed to help eligible Australians purchase a home sooner by:

  • Reducing the deposit required to enter the market
  • Lowering ongoing mortgage repayments
  • Bridging the gap between borrowing capacity and the cost of a suitable home
  • Making home ownership more accessible for first home buyers

Could you be eligible?

If you’re considering purchasing your first home, the Help to Buy Scheme could make your home ownership goals more achievable.

Our team can connect you with participating builders and experienced mortgage professionals who can help you understand the scheme, assess your eligibility and guide you through the application process.

To learn more about eligibility requirements and how the scheme works, visit the Australian Government’s Help to Buy Scheme website.

You can also speak to our friendly sales team on 1300 888 181 or via email at info@marigoldtarneit.com.au.

more news stories

Australian Home Buyer Grants and Schemes: How to Buy a Home with a 5% Deposit.

Buying your first home is no easy feat, especially when it comes to saving for the deposit. Fortunately, there are several Australian Government home buyer initiatives designed to help buyers enter the property market sooner.

One of these initiatives is the 5% Deposit Scheme.  The Australian Government’s 5% Deposit Scheme helps make home ownership more accessible by reducing one of the biggest barriers to buying a home, saving a large deposit.

How to buy a home with a 5% Deposit?

Traditionally, most lenders require a 20% deposit before approving a home loan. For many Australians, saving this amount can take years and delay their entry into the property market.

The 5% Deposit Scheme allows eligible buyers to purchase a home with as little as a 5% deposit, provided they can comfortably service their mortgage repayments. This low deposit home loan helps reduce the time spent saving and helps first home buyers into their own home sooner.

The Key Benefits

Enter the Market Sooner

One of the biggest advantages of the scheme is that it reduces the amount of time needed to save a deposit. Instead of waiting years to reach a 20% deposit target, eligible buyers can purchase sooner and begin building equity in their own home.

Access a No LMI Home Loan

Normally, when purchasing a home with less than a 20% deposit, lenders require borrowers to pay Lenders Mortgage Insurance (LMI). This insurance fee is in place to protect the lender in case of default and is seen as another expense and barrier to home ownership.

Under the 5% Deposit Scheme, the Australian Government acts as a guarantor for a portion of the loan, allowing eligible buyers to access what is effectively a no LMI home loan and avoid paying lenders mortgage insurance. This can result in lower upfront costs and significant savings to the overall cost of your loan.

How Does the Australian Government 5% Deposit Scheme Work?

While the Government provides a guarantee to your lender to help you get a loan with a small deposit through the scheme, your mortgage remains entirely between you and your lender. You continue to make your repayments as normal and retain full ownership of your property.

It’s important to note that the Government does not contribute towards your repayments or hold an ownership stake in your home under this scheme.

Because you’re borrowing a larger amount with a smaller deposit, your loan repayments may be higher than if you had saved a larger deposit. Many homeowners choose to make additional repayments over time to reduce their loan balance faster and build more equity sooner.

Things to Keep in Mind

In recent years, the scheme has become more accessible, with previous applicant caps and income restrictions being relaxed. Property price caps have also increased, allowing more Australian’s to buy a home with 5% deposit.

Property price limits still vary depending on your state, capital city or regional location, so it’s important to check the current thresholds that apply to your area.

To apply, you will need to speak with an eligible lender or a mortgage broker to confirm your eligibility and determine whether this scheme is the right fit for your circumstances.

With multiple first home buyer schemes available and varying eligibility criteria, it’s important to understand which option best suits your needs.

For more information on this and other first home buyer programs in Australia, visit the Australian Government website. 

You can also speak to our friendly sales team on 1300 888 181 or via email at info@marigoldtarneit.com.au. 

more news stories