If you are keen to buy a home but coming up short on the deposit you need, then this article is well worth reading, because the Victorian Government has set aside millions of dollars to help bridge that gap. The Homebuyer Fund was set up several years ago and its sole purpose is to help Victorians buy a home who may otherwise struggle to do so. Finding the deposit can be a big stretch and this scheme is designed to help, with the government providing a lot of the deposit money.
Here is an example. If you were to buy a $600,000 home, the bank could lend you $420,000 and the government would kick in and buy 25% equity by providing $150,000. You would then only have to find 5% ($30,000). Without that you would have to find all of the deposit because banks are not allowed to lend the full purchase price.
It is important to understand that the government is not lending the money to you so that means you are not burdened with paying the government back every month. The government becomes an equity partner with you, which means they own some of your home. Sure, the money has to be paid back to the government but only when the house is sold. You are not locked into paying the bank back on a regular basis and can leave that until the house is sold. However, there are ways you can pay the government out if you wish but there is no obligation to do so.
In essence, this scheme will allow more people to buy a home who otherwise would not be able to find the full deposit required. It allows people to own a better home than perhaps they otherwise would have been able to afford. That is its purpose.
In the example above, the government is providing 25% of the value of the home and is a co-owner until the time the home is sold.
This scheme can be particularly helpful for single people who don’t have a joint income but also first home buyers or families who would otherwise struggle to find the required deposit.
Torina Johnston and Gavin Duffy at the Community Bank Trafalgar & District have both had a lot of experience managing these particular loans and the bank has helped quite a number of people to buy a home through this scheme, not just in our district but throughout Victoria. The Bendigo Bank, a key partner with the government, is a great place to start.
Speaking of start, before you rush out to find a home, there are a few conditions that you need to understand and the bank will help you with that. They will explain what is needed to pre-qualify. There is also a government website which will provide you with a lot of information (see image right).
The government has set property price caps for this program and in our part of the world the upper limit is $700,000. This simply means the government will not provide 25% for a home worth more than $700,000 because they figure if you can afford that, you don’t need their help. Equally important, you don’t have to spend $600,000 or $700,000. If you find the home you want at $500,000 and you have pre-qualified, the scheme can apply.
Likewise, if you had more than the bare 5% deposit you can then choose to keep the government input at 25% and have a smaller bank loan. These examples are to show that the scheme has some flexibility.
If you are aboriginal you may be eligible for 35% instead of $25%
So, if you are wondering what next, your next move is to call the bank and Bendigo Bank is a major partner with the government in the Homebuyer Fund, so they can and will advise you thoroughly.
So call Torina Johnston or Gavin Duffy at Trafalgar and District Community Bank on 5633 2783. And if you wish to check the government site you will find a lot of information at www.sro.vic.gov.au/homebuyer.
