A plan to make it easier for first home buyers to get on the property ladder

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The Victorian Government is trialling new schemes to help people to buy their first home if they don’t have a substantial deposit saved. These also include stamp duty concessions and extra grants, which aim to help first home buyers.

Under the shared equity schemes, if homebuyers can save a 5 per cent deposit, the government will cover the rest — but it will also own up to 25 per cent of the home. Low-income earners may not need any deposit at all.

GOVERNMENT TO CONTRIBUTE FOR HOUSE DEPOSIT

The HomesVic scheme allows people to buy a home if they can meet regular mortgage repayments but haven’t saved a big enough deposit. Singles earning less than $75,000 or couples earning less than $95,000 will be able to access this program. It will apply to the purchase of both new and existing homes.

Buyers will need to have a 5 per cent deposit and must earn enough to get a mortgage for the remainder of the property’s value. This will also limit how much they can borrow.

The Victorian Government will contribute funds to make up the shortfall in the deposit. It will own up to 25 per cent of the property so that the home buyer can avoid paying mortgage lenders insurance.

When the properties are sold, HomesVic will recover its share of the equity and reinvest it in other homes. However, there is no time limit placed on the sale of the home.

The scheme will be introduced in January 2018 and the government will co-purchase up to 400 homes.

SECURE A HOME LOAN WITH NO DEPOSIT

This is more targeted towards low-medium income earners and it will apply to the purchase of new homes.

The National Affordable Housing Consortium will decide who is eligible and how expensive the property can be.

Eligible households would be able to secure a mortgage with little or no deposit, without paying mortgage insurance due to the assistance provided by the consortium.

In return, the NAHC would have a registered second mortgage over the property, but the bank loan would still have priority.

About 100 home buyers will be helped through this scheme.

The Victorian Government will help fund the scheme through a $5 million grant to the NAHC, and this funding will be matched by the consortium.

FIRST HOME BUYERS TAKE PRIORITY

The Victorian Government will also allocate 10 per cent of any government-led developments to first time buyers.

This approach will be used for the first time at Arden, a former industrial area covering 56 hectares on the northern edge of the Melbourne CBD, which is expected to house about 15,000 people.

Under this policy, 1500 people would be first home buyers.

FIRST HOME OWNER GRANT

First home buyers in Victoria will receive up to $22,500 when buying their new homes. Starting from 1 July 2017, first-time buyers purchasing new homes in regional Victoria will get $22,500. For those who chose to buy new homes in the metropolitan area will receive $18,000 grant while buyers who opt for existing properties will get $9,000.

This boost from the Victorian government is in addition to the Federal government's boost of $7,000 for existing housing and $14,000 for new ones.

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