help to buy scheme

Australia’s Help to Buy Scheme Explained – Unlocking Home Ownership

Did you know that you can buy your dream home sooner and with just a fraction of the traditional deposit with the help of Australia’s Help to Buy scheme? Set to launch in late 2024, this initiative aims to revolutionise home ownership by making it more accessible and affordable to a wider range of buyers.

What is the Help to Buy Scheme?

The scheme is a government initiative designed to operate as a shared equity plan. It allows eligible applicants to buy a property in co-ownership with the government. Under this scheme, you can apply for a home loan with just a 2% deposit, without having to pay Lenders Mortgage Insurance (LMI).
The government will then contribute 30% of the total purchase price for existing homes or 40% for newly built homes. This means you’ll only have to apply for a mortgage that is 58-68% of the total property value!

How Will the Government Help to Buy Scheme Work?

The government has announced that the initiative is set to begin in late 2024 (although no exact date has been announced yet) and will run for 4 years. With an initial allocation of 10,000 places per year, the scheme offers substantial support to prospective homeowners.

As a successful applicant, you’d contribute a 2% deposit while the government would provide a loan equal to 30-40% of the property’s value. While you live in the property, no rent is payable on the government’s share. When you sell the property, the government will be repaid their share from the sale proceeds (based on their ownership percentage, not their original financial contribution).

Who Can Apply for the Scheme?

To qualify for the Help to Buy scheme in Australia, you must first meet specific criteria. For example, you must:

  • Be 18 years or older and an Australian citizen.
  • Not currently own property in Australia (or overseas).
  • Intend to live in the property post-purchase.
  • Have an annual income below $90,000 for singles or $120,000 for couples.
  • Provide a 2% deposit and cover upfront costs like stamp duty and legal fees.
  • Assume responsibility for ongoing expenses such as rates, maintenance and utilities.

Will There Be Any Limitations on the Property Purchase Price?

There will be set limitations on the purchase price for eligible properties. The property price cap will depend on which state or territory you’re planning to buy in, as well as whether you’re purchasing in a metro or regional area.

  • New South Wales: Prices will be capped at $950,000 for Sydney and other major regional centres, while the remaining regional areas will be capped at $750,000.
  • Queensland: Prices will be capped at $700,000 for Brisbane and other major regional centres, while the remaining regional areas will be capped at $550,000.

How Will This Initiative Help Australian Home Buyers?

This initiative will offer some compelling advantages, including:

  • The ability to buy a home sooner, with a reduced deposit requirement.
  • No Lenders Mortgage Insurance (LMI), which could save you thousands of dollars.
  • Lower home loan repayments, making your mortgage more manageable.

For instance, imagine you want to buy a new home in the Northern Rivers region for $750,000. Without Help to Buy, saving $150,000 for a 20% deposit could take 5 years or more. But with this scheme, you’d only need to save $15,000 for a 2% deposit. Additionally, with the initiative covering 40% ($300,000), your mortgage would only be $435,000, resulting in drastically reduced monthly repayments.

Ask the Team at ZEP Finance About the Help To Buy Scheme

Excited about the possibilities offered by this new government initiative? Prepare to seize this opportunity with expert guidance from ZEP Finance. We specialise in navigating complex financial situations and can assist you in maximising the benefits of this initiative. Contact us today to discuss your options, understand eligibility requirements and ensure you’re ready to act swiftly when applications open.

Book an appointment with ZEP Finance today and secure your place in this groundbreaking initiative.

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