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[VIC] Government Contribution of up to 25% of Your Home Purchase Price (as Shared Equity) @ State Revenue Office Victoria

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[VIC] Government Contribution of up to 25% of Your Home Purchase Price (as Shared Equity) @ State Revenue Office Victoria
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haha1 on 08/10/2021 - 19:17 sro.vic.gov.au (744 clicks)
Last edited 11/10/2021 - 12:44 by 3 other users

Eligible homebuyers can now receive a contribution of up to 25% towards the purchase price of their property, reducing their minimum required deposit to 5% and avoiding the need to pay Lenders Mortgage Insurance.

For eligible Aboriginal or Torres Strait Islander homebuyers, this contribution is up to 35% and the minimum required deposit is 3.5%.

Who is eligible for the Homebuyer Fund?

To be eligible to participate in the Homebuyer Fund, you need to:

  • Be an Australian citizen or permanent resident and be at least 18 years of age at settlement.
  • Have saved the required minimum deposit (at least 5% or 3.5% depending on your circumstances) of your property price.
  • Earn $125,000 or less per annum for individuals, or $200,000 or less per annum for joint applicants. This refers to your gross annual income.
  • Occupy the purchased property as your principal place of residence.
  • Be a natural person (that is, not an organisation, company, trust or other body or entity).
  • Not purchase your property from a vendor who is a related person.
  • Not own an interest in any land at the time of purchase (including as trustee of a trust or beneficiary under a trust).
  • Not be acting as trustee of a trust.
  • Not be a shareholder in any corporation (other than a public company) that owns any land

The Victorian Homebuyer Fund is a shared equity scheme, meaning that the State’s financial contribution is made in exchange for a share, or proportional interest in the property.

As the value of the property changes, so too will the value of the State’s share, or interest in the property. This means the Homebuyer Fund will share in any gains in your property’s value.

Participants can repay the Homebuyer Fund’s share, or interest in their property over time. Repayments can be made by refinancing, using savings, and from proceeds when the property is sold.

The property must be a standard residential property such as a house, townhouse, unit or apartment (vacant land is not eligible). The maximum purchase price must be $950,000 or less in Metropolitan Melbourne and Geelong, or $600,000 or less in other eligible regional locations.

Financial Home Loan Loan Shared Equity

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closed Comments

  • cooldog on 08/10/2021 - 19:21
    +1

    What?

  • lazydesi on 08/10/2021 - 19:22
    +23

    this is not a good policy in my view. we need the house prices to comedown and need to tax the investment properties, abolish negative gearing.

    • Mkak on 08/10/2021 - 19:26
      -8

      No.

    • wakie on 08/10/2021 - 19:29
      +21

      The haters must own 26 investment properties.

      • Albtal on 08/10/2021 - 19:34

        We need them up more they are not up enough yet

      • Mkak on 08/10/2021 - 22:51
        -1

        No, only one.
        But this is a terrible idea will push the price of housing up and also make it hard for the people taking the scheme to sell and upgrade.

    • nico8amy on 08/10/2021 - 19:45

      It's for first home buyer only.

  • Jenny Death on 08/10/2021 - 19:22
    +10

    Yeah this wont inflate housing prices further…

    • TEER3X on 08/10/2021 - 19:29

      Sad but true

  • Mkak on 08/10/2021 - 19:23
    +1

    Victoria only, and they own the share they invest in. No thanks.

  • rabbit71 on 08/10/2021 - 19:23
    +1

    I just thought property prices crashed 25%

  • Whatisthatvelvet on 08/10/2021 - 19:24
    +2

    Can't see where to apply code.

    • ph81 on 08/10/2021 - 19:25
      +1

      Giggity

  • Mintee on 08/10/2021 - 19:26
    +1

    Im so confused with this scheme? So the government owns a % of your home and you need to pay it back through your mortgage?

    • TEER3X on 08/10/2021 - 19:29

      No they pay for up to 25% and they get to keep it along with any capital appreciation.

      • Mintee on 08/10/2021 - 19:31
        +1

        The fund doesnt make sense, You do need to pay the fund back as you meet certain thresholds… but theres no interest on the % they own?

        • Frankensnore on 08/10/2021 - 19:39

          No interest, but your debt to them raises as the property raises.

          For example, if now it is worth 1m, their ownership is 25% or $250k, say next year it raises 10% to $1.1m, then it becomes $275k.

          It says you can pay it down, but idk how.

          • Mintee on 08/10/2021 - 19:42
            +1

            @Frankensnore: Wow. If that's the case this is a disgusting deal. Absolute Rort. There is no way the the price of your property will grow slower then the amount of interest paid. Setting up for more longer term failure

            • Mechz on 08/10/2021 - 19:48

              @Mintee: I see your point but this is a way for people who don't have the means to save enough to buy a property and are paying rent to the equivalent of the mortgage.

            • Frankensnore on 08/10/2021 - 19:54

              @Mintee: Yeah but don't forget that the alternative is the owner don't buy anything, their 750k remain 750k, instead of $825k.

              • TEER3X on 08/10/2021 - 19:58

                @Frankensnore: That's arguably better, all these "incentives" pollute the waters, they hurt the average person in the long run

                • Frankensnore on 08/10/2021 - 20:05

                  @TEER3X: Which one did you say better?

                  It says you have to live there, so this won't benefit the investors. But I wonder what if the buyer moves out and rent it out? Can they force them to sell if they don't meet their ongoing obligations?

              • Mintee on 08/10/2021 - 20:04

                @Frankensnore: Respectfully I see this, but at the same time, over a time period your lifestyle changes, assuming we're the sterotype here, we've pumped out two kids. I need a bigger house, I need to move, the houses around me have gone up at the same rate of inflation. The government pockets that difference that I would have paid to the bank rather then myself. I now have an issue where I cant afford a bigger house in the same location. Im back to square one?

                • Frankensnore on 08/10/2021 - 20:07

                  @Mintee: Not really, because to move to bigger house you can still use the same scheme, ie 5-25-75. But you have to sell your old house, can't rent it out.

                  Essentially no different if there is no scheme, moving to bigger better house is more expensive but at least you can only pay 5% deposit

        • enigma48 on 08/10/2021 - 19:48
          +4

          Think of it as you can’t afford a place on your own, so you co-sign with someone else with more resources. You can almost afford the place on your own but need some help. But they keep their stake and when you sell, you get 75% of the house price increase and they get 25%. (If you went in 75/25)

          They’ve had it for a while in the UK: https://www.gov.uk/affordable-home-ownership-schemes/help-to…

          There are big positives and big drawbacks. First home buyers aren’t a majority of the property market, so this won’t massively change demand much (but it will increase it). Politically this will be positive, as all the first home buyer stuff generally is.

          The risk to government is minimal - in a way, they’re the perfect partner: they almost never go broke or change their mind. Parents helping you but now they’re sick and need financial help? Sister helping but now her family needs the money they lent? Had a falling out with your partners and now you must sell?

          With housing prices as is and affordable housing going nowhere fast, this is another separate approach to get people in homes.

          I’m no expert but zero stamp duty, the FHLDS, FHSSS, and every other first home scheme didn’t double prices so this won’t have a major impact. But it’ll keep the low end of the market stable and increase their prices a bit more.

          • twocsies on 08/10/2021 - 20:12
            +1

            @enigma48: The rules above don't restrict the scheme to first time homeowners, only that you cannot currently own property. I see nothing preventing liquidating your property portfolio (living in rental property), then getting the 25% government share.

            • enigma48 on 09/10/2021 - 12:12
              +1

              @twocsies: Yep, you’re right about the first time homeowners.

              I can’t see anyone selling off three properties, staying within the 80k/100k single/couple annual income limit, and finding a property within the value cap to take advantage of this though.

  • Ronerrlaw on 08/10/2021 - 19:26
    +1

    Lol might wanna tag it vic

  • King Steuart on 08/10/2021 - 19:27
    +1

    Did this get Brodened?

  • mickeyjuiceman on 08/10/2021 - 19:29

    The title is so bad it's kinda impressive

  • B Wat on 08/10/2021 - 19:29

    Lol

  • MisterEd on 08/10/2021 - 19:30

    Is the buy out figure from govt the initial 25% investment or the value at time of sale?

    If it’s initial value then you’ve just got yourself a free loan.

    Economy +++

    Jobkeeper+Disasterpayemt+homebuyer

    • kirk7 on 08/10/2021 - 19:36

      If the house doubles in value then I take it their initial contribution is doubled….so your pay back is now doubled.

      • MisterEd on 08/10/2021 - 22:14
        +1

        Rates go up everyone defaults
        govt takes your house,
        makes it into govt housing
        Gives it to you to live in while paying you Centrelink + house keeper allowance

        Economy ++++

  • Travelbug on 08/10/2021 - 19:31

    Sounds good to me. Nothing like having the Government in your life- after all "they are there to help".LOLOLOLOLOL LL LLOOOO

    • rompastompa on 08/10/2021 - 19:40

      Each year following the purchase of your home, you will be required to complete an annual review and provide supporting information to ensure you have maintained your eligibility for the Homebuyer Fund.

      You must seek approval before making any modifications or renovations of more than $10,000; or those that involve structural changes or require authorisation, such as council approval.

      You also must seek approval to refinance your property, sell your property, or make voluntary payments that result in you exiting the Homebuyer Fund within the first two years.

      Probably be better to keep saving and have a better LVA, though it would be a good chuck of interest you're not paying (until you need to pay SRO back)

  • kirk7 on 08/10/2021 - 19:35

    Hows this a deal?

    • funnysht on 08/10/2021 - 19:43

      deal for the government. Use tax payer money to 'legit' invest and make profit while pretending to help home owners.

      • Revrnd on 12/10/2021 - 19:34

        Dan must have taken a few tips from his mate Xi.

        Great way to turn Victoria into the next Evergrande.

  • jjcf on 08/10/2021 - 19:35
    +2

    State of Victoria about to be the country’s biggest baggies.

  • madska on 08/10/2021 - 19:37

    missing one more condition in OP and an important one at that…..

    "The property must be a standard residential property such as a house, townhouse, unit or apartment (vacant land is not eligible). The maximum purchase price must be $950,000 or less in Metropolitan Melbourne and Geelong, or $600,000 or less in other eligible regional locations."

    another word…..save the apartments :D

    • ModeratorRichardL on 08/10/2021 - 19:38

      Added to description.

  • Kooratz on 08/10/2021 - 19:42
    +1

    Nothing good on this deal 🤬

  • funnysht on 08/10/2021 - 19:43
    +1

    Good deal ….
    …..for the government. Use tax payer money to 'legit' invest and make profit while pretending to help home owners. If they really wanted they could just say no stamp duty for 1st home buyers etc

  • Tyrx on 08/10/2021 - 19:45
    +1

    These schemes just inflate the prices and leave first home buyers worse off.

    For eligible Aboriginal or Torres Strait Islander homebuyers, this contribution is up to 35% and the minimum required deposit is 3.5%.

    More pandering to the middle and upper middle class while ignoring where the real strife is, which is out in the regional communities… It's no wonder that regional statistics for Indigenous people are getting worse - meanwhile kids with Indigenous backgrounds graduating from University have better employment and salary outcomes than their non-indigenous peers.

  • clover on 08/10/2021 - 19:48
    +1

    Goodness, how many more inventive ways our government can think of to push up house prices?

  • Thiefsie on 08/10/2021 - 19:50
    +1

    Wow this is basically awful. Here, let us take a cut of your property, overshadow you so you can't do anything with it without our permission, and take the same cut in any capital gains when it goes up in value.

    "interest free"

    Yikes.

    I suppose this is only helpful if you truly can't afford a home that might be suitable, so it might bump you up a suburb/bedroom bracket or the like.

  • popsiee on 08/10/2021 - 19:52
    +1

    People have an option to buy out the government share in the future .
    Hence if housing continues on current trends these guys who qualify can clean up taking that option .
    I'd love to qualify and have a free crack for glory with where I think housing will be in a few years hehe :)

  • cloudy on 08/10/2021 - 19:52

    There’s been plenty of terrible housing policies from all sides and all forms of government, but one takes the cake. What terrible use of tax payer money then to drive up property values and make it even more unaffordable.

    I own property and I hate this policy.

  • Bafranz on 08/10/2021 - 19:53

    Saving for a deposit is so last year..

  • expatOz on 08/10/2021 - 19:53

    Are you sure about the avoiding the need to pay Lenders Mortgage Insurance part? Its not mentioned anywhere.

    • Bafranz on 08/10/2021 - 19:54
      +2

      "reducing their minimum required deposit to 5% and avoiding the need to pay Lenders Mortgage Insurance." First paragraph

  • pennypincher98 on 08/10/2021 - 20:01

    Was just reading like this and it seems a terrible idea but one that will net the government a lot.

    So not only does one have to face with repaying a mortgage (which will hike rates soon enough) they have to repay up to 25% of the appreciation on their property?

    • Say a house is $600k. 5% deposit is $30k. 25% is $150k. $420k loan.
    • By this time next year say house prices grow by 10%, so 25% is now $165k. Interest rates go up 4% or so.
    • You're now paying back 14% more?

    Please correct me if/where I'm wrong.

    This is the worst thing I've heard since charging a EV usage charge for electric cars.

    • foursure on 08/10/2021 - 20:43

      Yes, but also no. I thought the same then I tried to look at it from a different perspective. Unfortunately I had to take off my OzBargainer hat to do so…

      If rent is equivalent to the mortgage repayments and the only barrier to purchasing is the deposit (because rents, right?) then this makes sense as long as you recognise the 25% offset.

      In your calculations, even a $450k (75%) ownership with 10% appreciation means my portion will still be $495k, $45k more than I had before. If I was renting my portion of appreciation is $0. I know which I'd take if the opportunity was there, though there is clearly still risk involved. (This assumes they own 25% of sale price, not valuation at time of sale - I struggled to find definitive T&Cs on the website).

      Of course I've ignored the conversation about shares vs houses, cash flow vs assets, rent increases vs interest rates. Everyone's scenario is different.

      Converting rent money to an opportunity for an appreciating asset, especially if there's no spare cash flow for a lower capital investment, means perhaps its not the worst thing for a certain subset of the public.

      Of course as others have said, the sooner you pay off the Homebuyer share the better…

      • Unorthodox on 08/10/2021 - 21:00

        No chance this will be allowed to be an IP… They're staying annual checks

        • foursure on 08/10/2021 - 21:08

          Absolutely agree regarding IP. The context of my post may not have been clear.

          I'm talking (theoretically) about me currently paying rent, which I could otherwise pay towards a mortgage as a PPOR if I could enter the market.

          • Unorthodox on 08/10/2021 - 21:17

            @foursure: Makes sense

            Realistically it also means you can't add capital improvements to it such as renovating to add value without first paying off the gov share otherwise you'd lose out on a % of that value add.

            Limitation of having to buy back from the gov in those min $10k increments is also going to be difficult if you're servicing the mortgage as well.

            Assuming a borrowing of $200,000 I doubt a legitimate user could pay that back under 5-10 years taking into account property value increases…

      • pennypincher98 on 08/10/2021 - 21:00

        That is true I guess that rent money say at $400 per week = $20,800 a year

        I know that's not taking a lot of things into consideration that buying entails but I can kinda see.

        It's a very specific situation you have to be though for it to be viable, or you must really want to be paying off your own home.

    • ninnypoop on 12/10/2021 - 15:57

      Assuming the market continues to rise (or at least stays steady), then this scheme seems to be great for first home buyers to get into the market and flip the property in 5 or so years.Potentially to upgrade to a larger family home.

      I see no problem with getting into a house as a PPOR with the government owning 25% (though this idea does erk me), then in 5 years if the house has gone up 10%, then I take the profit on my 75% and pay the government out on their 25% portion. I still walk away not paying any rent for 5 years and hopefully some profit on my initial outlay, but at very worst, if the market doesn't rise from where it is today (and doesn't sink!) and if I have only maged to pay of the interest on the loan, then I still come out on top because I havent paid rent for 5 years.

      Also, need to consider that you dont pay any interest on the governments 25%. So rather than interest accumulating on the whole $600k, im only paying interest towards my portion ($420k) for the life of the loan. Thats so good! right?

      I hope im not looking at this wrong. Cause im applying for a house loan as we speak!!

  • expatOz on 08/10/2021 - 20:08

    Participants can repay the Homebuyer Fund’s share, or interest in their property over time. Repayments can be made by refinancing, using savings, and from proceeds when the property is sold.

    I don't understand the repayment to gov, do I have to repay even if I intend to stay long term or even all my life and never sell?

    • Bafranz on 08/10/2021 - 20:10

      Yes you have to repay, and the sooner, the less interest you pay

  • theone4u on 08/10/2021 - 20:08

    sounds like a scam

    • Revrnd on 12/10/2021 - 19:42

      More like a Victorian Belt and Road initiative.

  • Unorthodox on 08/10/2021 - 20:13

    Not a deal - more so an announcement

    Government should be implementing measures to bring down house prices not make it easier to inflate.
    - obviously government is happy because you pay more stamp duty as the value increases and they own 1/4 equity so there's more incentive for them to keep pushing up the price.

    • Mechz on 08/10/2021 - 21:42

      The government would never want to bring down house prices. Are you insane? It would ruin a lot of hard working people, and probably the economy overall.

      • Nom on 10/10/2021 - 09:59

        I'm a hard working home owner, and I absolutely want the value of houses to drop - the next generation will never be able to buy a house with the prices as they are.
        How exactly would a price drop "ruin" me ?

        • Mechz on 10/10/2021 - 10:01

          Because if you needed to sell and move, no sane bank would loan you 130% of the next purchase price against a house worth less than you already owe.

          • Nom on 10/10/2021 - 10:06

            @Mechz: But the house I'm moving to, would also have dropped just like my existing house.

            My existing house is worth more than double the amount i paid, it would have to be a colossal drop to make it worth less than I owe !

  • Jef Tino on 08/10/2021 - 20:20

    Public servants inventing policies to waste other people's money.

    Because in Victorian wonderland, everything else is awesome…

  • MisterEd on 08/10/2021 - 21:50

    Here are the rate fees mr government please pay 25%

    • popsiee on 09/10/2021 - 07:43

      I can't understand all the negs on this post with more people being able to get into property with an option to buy out the govt equity possibly making 6 figures in the future :)
      Nice of them with the income criterion to look after rich people only :)

      • TEER3X on 09/10/2021 - 07:47

        because everyone knows this will only add to housing becoming more unaffordable and doesn't really address the real issue(s)

        • popsiee on 09/10/2021 - 07:56

          But using RBA data the rich people that can qualify will have a nice ride to 200K + of profits in a few years at the higher range qualifying houses .
          Hence this offer is going to have overwhelming demand .

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