A new scheme for NSW homebuyers worth understanding

If you are dreaming of owning property in Neutral Bay or you have a loved one who wants to buy but isn’t in a position to do so, then there is a new scheme from the state government that may make a difference.

The NSW Government’s Shared Equity Home Buyer Helper Scheme is designed to make it easier for Australians who might not otherwise be approved for a mortgage, such as older singles, key workers buying their first home and single parents.

Here’s how it helps people to break into Sydney real estate:

What is the Shared Equity Home Buyer Helper?

Under the Shared Equity Home Buyer Helper Scheme, the government will contribute up to 40 percent of the sale price of a new home and up to 30 per cent of the sale price of an existing home.

This is particularly helpful not only in reducing the cost of a mortgage for eligible recipients but also, more importantly, by reducing the amount the recipient needs to pay on their deposit.

When you or a loved one makes a purchase this way, the government receives the relevant amount of equity in the property, but the buyer lives in the home and their name is on the deed.

If you’re the buyer, you don’t need to repay or pay rent or interest on the government’s equity in your home. You do have the option if you have the capacity to make voluntary repayments over time so you can buy back the equity from the government.

You are even free of any costly lender’s insurance on the government’s share.

Who is eligible for the Shared Equity Home Buyer Helper Scheme?

To be eligible for the scheme, you must be 18 years or older, an Australian or New Zealand citizen or permanent resident.

You also need to be a single parent, an ‘older single’ or a key worker. Single parents must have one or more dependent children, older singles must be 50 or above, and the government defines key workers as:

– Early childcare educators
– Nurses or midwives
– Paramedics
– Police officers
– Teachers

To be eligible, you also must:

– Contribute a minimum of 2 percent of the purchase price towards the deposit
– Live in the property you purchase
– Not own any other land or property
– Not be able to secure approval for mortgage without the government contribution
– Be able to make your repayments

Finally, you must also meet the income and asset requirements.

For your income, you must earn a gross annual income of no more than $93,200 for singles and $124,200 for couples.

Assets are a little more complicated and will vary depending on the price of the property, your age, your gross income and whether you are applying as a single or a couple.

Your assets mustn’t exceed:

– 30% of the property purchase price for joint applicants with a combined gross annual income of more than $93,200.

– 45% of the property purchase price for:

• single applicants aged 18 to 49
• joint applicants with a combined gross annual income of up to $93,200.

– 65% of the property purchase price for single applicants aged over 50

Eligible properties

As long as it complies with their lender’s requirements, participants can purchase:

– A house, townhouse, apartment/unit/flat or duplex
– A vacant block of residential land, together with an eligible comprehensive home-building contract for a new home
– A property that is set to be demolished, together with an eligible comprehensive home building contract for a replacement home.

There are also price limits on eligible properties.

– $950,000 for Sydney and major regional centres, including Newcastle and Lake Macquarie, Illawarra, the Central Coast and the North Coast of NSW
– $600,000 for other regional areas

Finally, the property you purchase must be in NSW.

Lenders

At the moment, the lenders involved in the scheme are Bendigo Bank and Unity Bank.

If you apply, you must do so through one of these two lending partners. Expect to be asked for identification documents as well as proof of income, as you would with a normal home loan application process.

Need some property advice?

Reach out to HPA today if you are looking for a suitable inner-city property, and we will do our best to help.