Shared Equity Scheme guide for NSW homebuyers
The Shared Equity Scheme also known as Help to Buy Scheme is newly revamped initiative designed to assist Australians in purchasing a home with reduced upfront costs. The scheme, set to launch in late 2025, will offer financial support to 40,000 eligible households, helping them get onto the property ladder by contributing a percentage of the home's equity. The Federal Government’s contribution will be up to 40% for new homes and 30% for existing homes, providing a smaller deposit requirement and helping reduce mortgage repayments.
How does the Shared Equity Scheme work?
The Shared Equity Scheme works by allowing homebuyers to purchase a property with a smaller deposit of just 2%. The government will provide an equity contribution, which reduces the total loan size and, in turn, the monthly repayments.
Government contribution: Up to 30% for existing homes and up to 40% for new homes.
Eligibility: Homebuyers must meet certain income criteria and not currently own other properties.
No Rent: There is no rent charged on the portion of the home owned by the government.
Repayment: Over time, the government’s equity stake can be bought back, or repaid when the home is sold.
Eligibility criteria for the Shared Equity Scheme
To qualify for the scheme, potential homebuyers must meet the following criteria:
Be an Australian citizen or permanent resident, aged 18 years or older.
Annual income limits: $100,000 or less for a single applicant, or $160,000 for a couple.
Must live in the property being purchased.
No existing property ownership, whether in Australia or overseas.
Must have saved a minimum 2% deposit.
Must be able to cover other upfront costs like stamp duty, legal fees, and bank charges.
Property price caps by region
The scheme has property price limits depending on the location:
NSW – Capital city & regional centres: $1,300,000.
NSW – Other areas: $800,000.
How much can you save with the Shared Equity Scheme?
By participating in the scheme, homebuyers can benefit in two ways:
Smaller loan size and repayments: For instance, purchasing a new home in Sydney valued at $950,000 could save up to $380,000 over the life of the loan.
Avoidance of Lenders’ Mortgage Insurance (LMI): Typically, if you borrow more than 80% of the purchase price, LMI is required. But with the government’s contribution, you avoid this extra cost.
What are the benefits of the scheme?
Key benefits include:
Lower deposit requirements: Homebuyers can enter the property market with just a 2% deposit.
Smaller home loan and repayments: With the government contributing to the equity, the home loan amount is reduced.
No LMI costs: Even though you’re contributing less than 20% as a deposit, LMI is not required.
No rent charged on the government’s portion: This reduces the overall financial burden.
Can you increase your stake in the property?
Yes, you can increase your equity share over time. The minimum increase is 5% of the government’s share. This process, known as "staircasing", allows you to gradually buy back the government’s equity interest in the property.
What happens if your income exceeds the Limit?
If your income exceeds the threshold for two consecutive years, you may need to repay some or all of the government’s equity contribution. While the government has not yet specified whether the property would need to be sold, this will depend on individual circumstances.
Ongoing obligations under the Scheme
Homebuyers must ensure they meet several ongoing obligations:
Report any change of circumstances: For example, if you cease to be an Australian citizen or acquire another property, you must inform Revenue NSW within 3 months.
Home insurance: You must maintain comprehensive insurance coverage on the property.
Property maintenance: You are responsible for maintaining the property and carrying out necessary repairs.
Renovations: Significant renovations, costing over $20,000 or requiring council approval, need prior government approval.
Exiting the shared equity scheme
There are several ways to exit the scheme:
Voluntary payments: You can buy back the government’s share over time.
Sale of the property: The equity contribution must be repaid when the property is sold.
Refinancing: You may exit by refinancing your home loan.
Frequently asked questions about the Shared Equity Scheme
What is the Shared Equity Home Buy Helper Scheme?
The Shared Equity Scheme is a shared equity initiative introduced by the Australian government to help eligible homebuyers purchase a home with a reduced deposit. The government will contribute up to 40% of the purchase price for new homes and up to 30% for existing homes, allowing buyers to enter the market with just a 2% deposit.
How much deposit do I need for the Shared Equity Scheme?
To be eligible for the Shared Equity Scheme, you need to provide a minimum deposit of 2% of the property’s purchase price. The government’s equity contribution will make up the difference, reducing the size of your home loan and monthly repayments.
What are the income limits for the Shared Equity Scheme?
For eligibility, your income must be $100,000 or less per year for a single applicant, or $160,000 or less for a couple. This ensures the scheme targets those who need assistance entering the property market.
Do I have to pay rent on the government’s share of the property?
No, you do not need to pay rent on the portion of the property owned by the government. However, you will eventually need to buy back the government's share, either over time or when the property is sold.
Can I increase my share in the property?
Yes, you can increase your stake in the property by making voluntary payments. The minimum increase is 5% of the government’s equity, allowing you to gradually own a larger share of the home.
What happens if my income exceeds the eligibility limit?
If your income exceeds the limit for two consecutive years, you may be required to repay the government’s equity contribution. However, there is currently no indication that you would be required to sell the property, and this will depend on individual circumstances.
What happens if I want to sell my home?
If you decide to sell the property, you must repay the government’s equity contribution from the proceeds of the sale. Alternatively, you can buy out the government’s share through a voluntary payment or refinancing.
How does the Shared Equity Scheme reduce my home loan repayments?
The scheme reduces your home loan size by allowing the government to contribute up to 40% of the price for a new home or 30% for an existing one. This means you borrow less, resulting in smaller monthly repayments.
Will I have to pay Lenders' Mortgage Insurance (LMI)?
No, one of the key benefits of the Shared Equity Scheme is that you do not need to pay Lenders' Mortgage Insurance (LMI), even with a deposit of less than 20%. The government's contribution replaces the need for this additional cost.
Are there any property price caps for the Shared Equity Scheme?
Yes, there are price caps depending on the area:
New South Wales – capital city and regional centre: $1,300,000
New South Wales – other areas: $800,000
These caps ensure the scheme targets homes within reasonable price ranges for first-time buyers.
Can I buy any property with the Shared Equity Scheme?
No, the property must meet specific criteria, including being either a new or existing home. The home must also be your principal place of residence and cannot be used as an investment property.
What happens if I want to renovate the property?
Significant renovations (valued over $20,000 or requiring council approval) need to be approved by the government. A valuation must be conducted before and after the renovations to ensure the modifications increase or maintain the property’s value.
Do I need to maintain insurance on the property?
Yes, you are required to have comprehensive home insurance for the property, covering risks such as fire, flood, storm, and malicious damage. This protects both you and the government’s interest in the property.
What if I stop living in the property?
If you no longer live in the property as your primary residence, you must inform Revenue NSW within three months. Failure to notify could result in penalties or require you to repay the government's equity contribution.
Next steps with Buyvest
The Shared Equity Scheme can provide valuable support for first-time homebuyers looking to enter the property market sooner. If you’re considering taking advantage of this scheme, Buyvest can guide you through the process:
Assess your eligibility for the Shared Equity Scheme.
Prepare your finances and assist with meeting deposit and upfront cost requirements.
Connect with participating lenders for financing options.
Contact Buyvest today to explore how we can help you secure your future home with the Shared Equity Scheme.
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