If you're a first-time homebuyer in New South Wales (NSW), you've probably encountered the Shared Equity Scheme NSW. This program allows people like you to become homeowners without spending too much money. It's like a helping hand to make homeownership more achievable.
The rollout of this scheme has made getting a first home buyer loan much more accessible. We're here to guide you through all the details because we know it can be overwhelming, especially if you're new to first home buyer grants. So, let’s get started!
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What is the Shared Equity Scheme?
The Shared Equity Scheme, now known as the Shared Equity Home Buyer Helper in NSW, is an initiative by the NSW Government. Its main goal is to help eligible single parents, older singles (aged 50+), and key worker first-home buyers become homeowners with just a tiny 2% deposit.
Here's the exciting part: you won't have to worry about paying for Lenders Mortgage Insurance!
This program started in January 2023 and plans to accept up to 3,000 applications over two financial years (2022-2023 and 2023-2024).
How it Works
The government's contribution is determined as a percentage of the purchase price, and the maximum amount depends on whether the property is new or existing. The lending partner, after conducting their assessment, decides this percentage.
For new homes, the NSW Government’s contribution can go as high as 40% of the purchase price, while for existing homes, it can be up to 30%.
The New South Wales Government shares in the costs of purchasing a property with first-time buyers by acquiring a corresponding interest in the property.
Single parent in Sydney
Let's consider an eligible single parent in Sydney looking to buy a new home at the maximum price of $950,000. With the 40% government contribution, they could receive a maximum of $380,000. This generous contribution would significantly reduce their monthly mortgage repayments, saving them around $2,200 per month (assuming a 6% interest rate over a 30-year term).
First home buyer teacher in Wagga Wagga
Now, let's look at an eligible first home buyer who is a teacher in Wagga Wagga and is purchasing an existing home at the maximum price of $600,000. With the 30% government contribution, they could receive a maximum of $180,000. This contribution would lead to a noticeable decrease in their monthly mortgage repayments, saving them around $1,080 per month (assuming a 6% interest rate over a 30-year term).
Who Can Apply for the Shared Equity Scheme NSW?
To be eligible for the Shared Equity Scheme, you must meet the following criteria:
Age and Citizenship
You must be 18 years or older. You should be an Australian or New Zealand citizen. (Australian permanent residents can also apply.)
You need to have at least a 2% deposit.
You must occupy the property as your primary residence.
You should not own an interest in any land in Australia or overseas at the time of purchase.
You must demonstrate your capability to service home loans with a participating lender along with the government's contribution.
You need to comply with all purchasing costs, including stamp duty.
You should be able to cover ongoing costs such as property costs and maintenance.
The property you purchase should be less than $950,000 in Sydney and major regional centres (Newcastle, Lake Macquarie, Illawarra, Central Coast, North Coast of NSW) or less than $600,000 in other regional areas.
No Previous Grants
You should not have received any other first home buyer grants, such as the Home Guarantee Scheme.
Applicants are categorised into three demographic groups:
- With dependent child/children.
- Have a gross annual income of not more than $90,000 for singles.
- Financial assets should be under 45% of the total purchase price if your income is up to $90,000 per year.
- Not married or in a de facto relationship.
- Have a gross annual income of not more than $90,000 for singles.
- Financial assets should be under 65% of the total purchase price.
Key Workers (Teachers, Early Childhood Educators, Nurses, Police Officers, Paramedics)
- Have a gross annual income of not more than $90,000 for singles and $120,000 for couples.
- Financial assets should be under 30% of the total purchase price if your income is more than $90,000 annually.
Asset Limits and Contributions
Asset limits are a factor too. Your gross income must not exceed $93,200 for singles or $124,200 for couples.
These limits vary depending on property price thresholds, age, gross income, and whether you apply individually or as a couple.
For joint applicants with a combined gross annual income over $93,200, it's 30% of the property purchase price.
For single applicants aged 18 to 49 or joint applicants with a combined gross annual income up to $93,200, it's 45% of the property purchase price.
If you're a single applicant over 50, it's 65% of the property purchase price.
Keep in mind if your financial assets exceed $100,000, you might need to contribute part or all of the amount over $100,000 at settlement, adjusted for the deposit you provided.
Can I Combine the Shared Equity Scheme with Other Government Buyer Assistance Programs?
No, home buyers cannot use both shared-equity scheme and first home buyers assistance scheme. The NSW government's shared-equity trial scheme is quite similar to the one proposed by the Labor government for all first home buyers earning under $90,000 for singles and $120,000 for couples. Since these schemes are essentially identical, you need to choose one. You should check which scheme has more places available when lodging your application.
The NSW government's shared equity scheme does not impact stamp duty concessions or exemptions. If your property qualifies for these concessions or exemptions, you may benefit from waived stamp duty and waived Lenders Mortgage Insurance (LMI) for your home loan. Moreover, considering that the NSW government is contemplating scrapping stamp duty, this significant upfront cost might become a thing of the past.
What Are My Ongoing Responsibilities in the Shared Equity Scheme?
To stay in the program:
- You'll need to go through an annual review and provide proof that you still meet the requirements.
- Keep your property in good shape. Any changes or upgrades that could impact its value must get a green light from the government.
- Be prepared to independently handle property expenses like council rates, body corporate fees, utilities, and loan repayments.
Simplify Your Property Rental with Houst
Houst can help you manage your property, especially if you plan on renting it out on Airbnb or similar platforms.
With Houst, you can make some extra money by renting your place to travellers, and they handle everything. They help with Airbnb listings, Airbnb bookings, and even Airbnb cleaning up after guests leave.
So, if you're thinking about sharing your space with travellers, Houst can make it easy and stress-free. They're like your property rental management sidekick, ensuring everything runs smoothly while you sit back and relax.