What is the Victorian Homebuyer Fund?
The Victorian Government has announced a new initiative to help Victorians purchase a home with as little as a 5% deposit. Discover if you’re eligible for the Victorian Homebuyer Fund and what this could mean for you.
What is the Victorian Homebuyer Fund and how does it work?
The Victorian Homebuyer Fund is an initiative aimed at helping those with a low deposit to purchase a home. The initiative will allow more than 3,000 people to buy a home with a deposit as low as 5%, while the Victorian Government will provide up to 25% of the purchase price, and own an equivalent share in the property. This will also allow buyers to avoid Lenders Mortgage Insurance (LMI), which is a compulsory additional expense.
So for example, if you wanted to buy a $700,000 two-bedroom apartment, your contribution would look something like this:
- Purchase price: $700,000
- Your 5% deposit: $35,000
- Victorian Homebuyer Fund: Up to $175,000
The Homebuyer Fund is what we call a shared equity scheme, meaning that the state’s financial contribution is made in exchange for a share, or proportional interest in the property. This means that the Homebuyer Fund will have a share in any gains in your property’s value. You can repay the fund through refinancing, using savings, or from the additional proceeds when the property is sold.
Am I eligible for the Homebuyer Fund?
To be eligible, you must be over 18 years of age at settlement, and make less than $120,000 per year on a single income, or less than $200,000 per year if you’re a couple. You must also be acting as an individual (not part of a trust) and occupy the purchased property as your principal place of residence.
Aborigial and Torres Strait Islander home buyers require just a 3.5% deposit, with the government providing their co-purchase of up to 35%.
How much can I spend on a property?
Yes, your home price must be capped at $950,000 in Geelong or Melbourne, or up to $600,000 in regional Victoria.
Any other factors I should consider?
Before taking on a loan, it’s best to do some research. The Victorian Homebuyer Fund can help you secure a home with a low deposit, but you’ll need to repay it back.
Other things you should keep in mind before purchasing a home are:
Interest rates: Although they are at their lowest point in years, interest rates will rise again. So be sure your income can service the life of the loan once interest rates rise.
Participating lenders: When looking at vendors, do some research to find out what type of loan is right for you. There are many home loan options on the market, so compare to ensure you’re getting the best deal that will suit your lifestyle.
Want to take advantage of the Homebuyer Fund?