Is the ‘Help to Buy Scheme’ right for you?
If you’re trying to break into the property market but find the upfront costs a bit daunting, the ‘Help to Buy Scheme’ might be worth considering. It’s a government-backed, shared equity program that can make buying your first home more affordable. But, like any major financial decision, it comes with its pros and cons. Here’s some important things you need to know:
The upsides
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Smaller deposit, less stress: You can buy a home with as little as a 2% deposit, without needing to pay Lenders Mortgage Insurance (LMI), which can save you thousands upfront.
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Reduced monthly payments: With the government covering up to 40% of a new home or 30% of an existing one, you’ll borrow less and benefit from lower monthly repayments, potentially with better interest rates.
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Helps you buy sooner: This is especially useful in expensive areas where saving a big deposit takes years.
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More budget-friendly: With a smaller mortgage, you’ll likely find your monthly repayments easier to manage.
Things to keep in mind!
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Shared ownership: The government will own a share of your home, meaning they’ll take a cut of any profit when you sell, even if you’ve invested in renovations or improvements.
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Eligibility limits: There are caps on income and property prices, plus only a limited number of spots are available each year.
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Owner-Occupier requirement: You must live in the property as your main residence, eg, it can’t be used as an investment.
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Complex exits: Buying out the government’s share or refinancing later can be more complicated, as you only own a portion of the property.
The ‘Help to Buy Scheme’ can be a great option if you’re struggling to save a big deposit or have been priced out of the market. Just make sure you fully understand how shared ownership works, especially when it comes time to sell or refinance.
Getting help
Chat with me to explore if the ‘Help to Buy Scheme’ is the right fit for your situation. Contact me at adele@aphl.com.au for guidance.
