Affordable homes have always been at the top of every Australian’s demand from the government. A dream that influenced votes over the weekend. Coming out of an apparent victory, Anthony Albanese of the Australian Labor Party is Australia’s 31st minister.
Will the demand for low-cost houses be a reality in the next years to come? Here is what we have so far.
What is the Help to Buy scheme?
At the top of the priority for housing of the incoming government is the Help to Buy scheme. This is similar to other government guarantees but the difference is the amount the government is willing to shoulder
For new homes, the government will guarantee 40% of the purchase price while it is willing to cover 30% of the price of existing homes.
The aim of this new scheme is to extend the accessibility of the property market to a bigger chunk of the population. The incoming government expects to help 10,000 Australian homebuyers.
If you qualify, you will only need to put down 2% of the property prices as a deposit. You will also be exempted from paying lenders’ mortgage insurance (LMI) despite the ultra-low deposit. However, legal costs, stamp duty, and other related expenses are on you.
Who are eligible under this scheme?
You must be a first home buyer and the property must be your primary residence. You must not own any other property or land.
Your gross income must not be over $90,000. For couples, it should not exceed $120,000 combined. In case your gross income exceeds the threshold set by the government, they will make you repay their contribution in whole or in partial installments.
Permanent residents are not eligible under this scheme.
What kind of houses are qualified under this scheme?
New or existing stand-alone houses, semi-detached houses, duplexes, and townhouse units are allowed.
What will happen to the government’s equity share in eligible homes?
Technically, the government owns a part of your house. The government will not charge you rent but you can buy the government’s share when you are capable. You can buy a minimum of 5% from the government.
Will monthly mortgage repayments be cheaper?
Monthly mortgage repayments will be lower. By raising the equity to 40%, even if a homebuyer goes for a property on the price cap, the monthly mortgage repayments you need to pay will be significantly lower.
Let’s say you will go for a new house worth $950,000 in Sydney which is the property price cap. With 40% coming from the government, that is a savings of $380,000. At 30%, which is the guarantee for existing homes, that is $285,000.
Where can interested parties apply?
Once the government gives the green light for applications for the Help to Buy scheme, our brokers at Abacus Finance can help you with your application.