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HomesVic launched to support Victorian first homebuyers

HomesVic launched to support Victorian first homebuyers

The Victorian government recently launched HomesVic – a new housing affordability scheme intended to assist struggling first home buyers to take their first step onto the property ladder.

First announced in early 2017, HomesVic will take a proportional interest of up to 25% in the properties of first home buyers who meet the eligibility criteria, thus reducing the need for these borrowers to save large home loan deposits, or to seek support from a family guarantor.

At launch, the HomesVic scheme will support up to 400 home purchases, backed by initial funding of $50 million. Eligible borrowers will need to have a 5% deposit available for buying their first home, as well as a maximum income of up to $75,000 for singles, or up to $95,000 for couples or families.

When the properties are sold, the Victorian government will recover its stake from the sale price, to be reinvested in other homes. The government’s share can also be repaid by the borrower over the course of their mortgage term.

Example:

Laura works as a part-time teacher earning $50,000 a year. She applies to HomesVic and, with the scheme’s assistance, is able to buy a property valued at $350,000.

Laura takes out a loan of $245,000 on the property, supported by a 25% shared equity contribution of $87,500 and a 5% deposit of $17,500, effectively giving her a Loan to Value Ratio (LVR) of 70%.

Two years after the purchase, Laura secures a full-time role as a teacher earning $80,000 a year, which is within the income thresholds which are indexed each year. With increased income, Laura begins to pay the Government’s proportional interest. By this stage, Laura’s equity has increased from 5% ($17,500) to 12% ($42,000).

Laura approaches her home loan provider and is permitted to increase the home loan by $60,000 based on her increased income and a revaluation of the property at $375,000. This reduces the Government’s proportional interest from 25% to 9%.

Source: HomesVic

HomesVic will allow eligible borrowers to purchase property in selected areas of Victoria where there is high demand for housing, as well as good access to employment, public transport and other services. There are 33 priority areas spanning 85 Melbourne suburbs, 130 town and suburbs in and around key regional centres and seven peri-urban towns.

Borrowers eligible for HomesVic will also be able to receive the First Home Owner Grant when purchasing new dwellings in metro Melbourne ($10,000) or regional Victoria ($20,000), though not when purchasing established dwellings. Also, in Victoria, first home buyers who purchase a home valued at under $600,000 will not be required to pay stamp duty, and first home buyers who purchase a home valued between $600,000 and $750,000 will pay reduced stamp duty.

The launch of the HomesVic has been welcomed by the Housing Industry Association (HIA), with HIA chief executive of industry policy, Kristen Brookfield, comparing it to similar schemes in other states and territories, such as Land Rent in the ACT and Keystart in Western Australia.

“HIA figures show that the typical stamp duty bill on homes in Victoria has risen by 4000 percent since 1982. With the median price of a Melbourne dwelling at $720,417, this makes buying a house a pipe dream for so many low income young people.” – Kristen Brookfield, HIA

The HomesVic application process will commence in early to mid-February 2018.

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Learn more about home loans

Can I get a NAB first home loan?

The First Home Loan Deposit Scheme of NAB helps first home buyers purchase a property sooner by reducing the upfront costs required. This scheme is offered based on a Government-backed initiative, with10,000 available places announced in October 2020.

Suppose your application for the NAB first home buyer loan is successful. In that case, you’ll only need to pay a low deposit, between 5 and 20 per cent of the property value and won’t be asked to pay lender's mortgage insurance (LMI). You’ll also receive a limited guarantee from the Australian government to purchase the property.

If you’re applying for the NAB first home buyer home loan as an individual, you need to have earned less than $125,000 in the last financial year. Couples applying for the NAB first home loan need to have earned less than $200,000 to be eligible. To be considered a couple, you need to be married or in a de facto relationship. A parent and child, siblings or friends are not considered a couple when applying for a NAB first home loan.

The NAB First Home Loan Deposit Scheme is currently offered only to purchase a brand new property, rather than an established property.

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.