Home ownership is typically a major milestone for every First Home Buyer in Australia, as it requires a substantial amount of money and is on the wish list of countless Australians. However, the increasing prices of real estate and the demand for hefty deposits are the reasons why it often seems impossible for a First Home Buyer to get a foot on the property ladder. To help with this problem, the Australian Government has come up with the Help to Buy Scheme, which is a shared equity program aimed at making home ownership more affordable for those eligible to buy, especially First Home Buyers in Australia.
At Rovo Finance, it is our pleasure to assist Australians to comprehend the functioning of the scheme, determine the eligibility, and obtain the suitable home loan that best works with this program.
What Is the Help to Buy Scheme?
The Help to Buy Scheme is a shared equity program in which the government pays up to 40% of the purchase price for new homes and up to 30% for existing homes. This payment lowers the buyers’ loan amount, thus making the ownership of a home more affordable.
Key features include:
- Low Deposit Requirement: Buyers need as little as a 2% deposit.
- No Lenders Mortgage Insurance (LMI): Saving thousands in upfront costs.
- Shared Equity: The government shares in future gains or losses when the property is sold or refinanced.
- Ownership: Buyers retain full legal ownership of the property title.
How Does the Help to Buy Scheme Work?
Here is how the scheme operates step by step:
- Government Contribution
- Up to 40% for new homes.
- Up to 30% for existing homes.
- Buyer Deposit
- Minimum 2% deposit required.
- Loan Structure
- Buyers borrow the remaining amount from a participating lender.
- No LMI is charged, reducing costs.
- Repayment
- The government’s equity share is repaid when the property is sold, refinanced, or voluntarily bought out.
- Ownership
- Buyers remain the legal owner and can live in the property as their primary residence.
Who Is Eligible?
Eligibility is based on income, property type & residency status.
- Income Caps:
- Singles: Up to $100,000 per year.
- Couples or single parents: Up to $160,000 per year.
- Property Use:
- Must be owner occupied.
- Investment properties are not eligible.
- Residency:
- Must be an Australian citizen.
- Property Price Caps:
- Vary by state and region. For example:
- NSW (Sydney, Newcastle, Central Coast): $950,000 cap.
- VIC (Melbourne, Geelong): $850,000 cap.
- QLD (Brisbane, Gold Coast, Sunshine Coast): $700,000 cap.
Benefits of the Help to Buy Scheme
- Lower Deposit: Just 2% compared to the usual 20%.
- No LMI: Significant savings for borrowers.
- Access to Better Properties: Higher purchasing power due to government contribution.
- Faster Path to Ownership: Reduced borrowing requirements make home ownership achievable sooner.
Risks & Considerations
While the scheme offers various benefits, there are important considerations:
- Shared Equity: The government shares in capital gains or losses when the property is sold.
- Income Caps: Buyers must remain within income thresholds.
- Property Restrictions: Only applies to owner occupied homes.
- Additional Costs: Buyers still need to cover stamp duty, legal fees, and ongoing property expenses.
Important Compliance Requirements
- Buyers must notify the government if their circumstances change.
- Properties must remain owner occupied.
- Equity contributions must be repaid upon sale or refinancing.
- Buyers must meet ongoing eligibility criteria.
How Rovo Finance Helps?
Navigating the Help to Buy Scheme can be complex. At Rovo, we simplify the process by:
- Explaining eligibility and compliance requirements.
- Comparing participating lenders and loan products.
- Structuring finance to align with long term goals.
- Guiding buyers through documentation and approvals.
- Providing ongoing support from application to settlement.
Contact Rovo Finance:
Jitendra – Mortgage Broker
📞 Mobile: 0494 394 747
📧 Email: jitendra@rovofinance.com.au
FAQs
No. You retain full legal ownership. But the government holds an equity share.
As little as 2% of the property value.
Yes. You can voluntarily repay the equity contribution at any time.
You may no longer qualify for ongoing participation & repayment may be required.
Yes. With different contribution levels (40% for new, 30% for existing).
Yes. Buyers must cover stamp duty & other legal costs.
Bank Australia is a participating lender. With more expected to join.
