Calling all broke baddies that still live in their childhood bedrooms (aka practical icons). The federal government’s Help to Buy bill has officially passed into law, and it could be the game-changer you’ve been waiting for.
But before you start getting your new home’s Pinterest board together, let’s break down what this scheme is all about and whether you can join the party.
What is the Help to Buy scheme?
In simple terms, it’s a shared equity program designed to help low- and middle-income earners snag their first home. The government will pitch in a hefty chunk of the purchase price — up to 40 per cent for new homes and 30 per cent for existing ones.
This means you could potentially save big on your mortgage repayments. Labor claims it could cut your mortgage by up to $380,000.
How does the Help to Buy scheme work?
Here’s how it rolls: You’ll need to cough up a minimum deposit of 2 per cent of the home’s price. The rest will be covered by a mortgage from an approved lender.
The catch? The government will take a slice of your property pie, meaning they’ll get a share of any capital gains when you eventually sell. For example, if they own 30 per cent of your home, they’ll take 30 per cent of the profits when you cash out.
So, if you hit the jackpot with your property investment, they won’t let you forget who helped you get there.
Who is eligible for the Help to Buy scheme?
Now, let’s talk eligibility. To hop on this bandwagon, you’ll need to meet a few criteria:
- Be an Australian citizen aged 18 or over
- Have an annual income under $90,000 if you’re flying solo or $120,000 if you’re buying with a partner
- Not own any other property in Australia or overseas
- Live in the home you buy (this isn’t for your dodgy rental empire)
- Pass a financial capacity test (they want to make sure you can handle the mortgage)
If you’ve owned property before but are currently renting, you’re still in the game!
When does the Help to Buy scheme start?
Now for the million-dollar question: when can you start house hunting? Well, it depends on where you live. If you’re in the Northern Territory or ACT, you’re good to go as soon as the bill is officially passed.
For everyone else in Australia, you’ll need to wait for your state to pass its own legislation — a process that could take a while .
The scheme aims to help 40,000 families over four years, meaning spots are V limited, so if you’re keen you’ll have to act fast.
What else should you know?
Before you start picking out furniture and planning housewarming parties, keep these points in mind:
- There are property price caps depending on where you’re looking. For instance, Sydney has a cap of $950,000, Melbourne has a cap of $850,000 while Brisbane sits at $700,000.
- The government will reassess its stake annually based on changes in your income or property value. If things shift too much, they might adjust their share or even terminate the arrangement — so keep an eye on those finances!
- If you’re already part of another state or territory scheme, you’ll need to choose which one suits you best.
No states have commented yet on when they’ll be rolling out their schemes, but we’ll keep you posted!
Lead image: Getty images/ Canva
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