NSW Shared Equity Home Buyer Helper: What you need to know about shared equity schemes

NSW shared equity Home Buyer Helper helps home buyers buy a property with as low as a 2% deposit. Is it the right shared equity scheme for you?
joseph@itssimple.com.au

joseph@itssimple.com.au

January 19, 2023

nsw shared equity home buyer helper

The NSW shared equity Home Buyer Helper is a shared equity scheme that assists eligible home buyers in purchasing a property with as low as a 2% deposit. While it sounds promising, is it really worth it?

As Australia’s housing affordability remains an issue, the shared equity Home Buyer Helper removes the barriers of saving a large deposit to enable aspiring homeowners to get into the property market sooner.

Here, we reveal how the scheme works, who is eligible, its pros and cons and the other shared equity schemes available in Australia.

How does a Shared Equity Scheme work?

A shared equity scheme is an arrangement where an equity partner (lender, financial institution or the government) contributes a portion of the property’s purchase price.

Usually, the government contributes up to 40%. However, these schemes may vary depending on each state and territory.

With Australia’s current interest rates on the rise and cost of living pressures, owning a home is quite challenging. Fortunately, shared equity schemes are designed to boost homebuyers’ borrowing capacity and help them own their properties at a price they can afford.

Shared Equity Scheme NSW: Home Buyer Helper

Buying a property

Under the Shared Equity Home Buyer Helper, the New South Wales Government makes homeownership more achievable by making an equity contribution of up to 40% of the purchase price for new homes and 30% of the purchase price for existing homes.

Since the government contributes 30%-40%, you may not be required to pay Lenders Mortgage Insurance (LMI), potentially saving you thousands on your home loan.

The Home Buyer Helper commences on 23 January 2023. Applications will be accepted for two financial years (2022-2023 and 2023-2024), and there are 3,000 available places each financial year.

Who is eligible for the shared equity scheme?

To be eligible for the shared equity Home Buyer Helper, you must:

  • Be one of the following:
    1. Single parent of a dependent child
    2. A single person aged 50 years or older (not married or in a de facto relationship)
    3. A first home buyer who’s employed as a key worker (nurse, midwife, paramedic, teacher, early childhood educator or police officer)
  • Occupy the property as your principal residence
  • Have a minimum deposit of 2% of the property’s purchase price
  • Not have an interest in any land or property
  • Be an Australian or New Zealand citizen or a permanent resident of Australia
  • Be at least 18 years old
  • Have a gross income of not more than $90,000 for singles or not more than $120,000 for couples
  • Not be able to service your mortgage without the shared equity scheme but can still service your repayments over the life of the loan
  • Meet ongoing property requirements

What are homebuyers’ ongoing obligations?

Since the government has a share of the property, you must meet ongoing obligations to maintain your eligibility for NSW shared equity scheme:

talking with the bank
  • Annual review – You must comply with the annual review of your eligibility. If you don’t meet the criteria anymore, the government may require you to begin paying the government’s share.
  • Property maintenance – You need to ensure that the property is well maintained. Additionally, if you plan to make major renovations that would affect the property’s value, you should get approval from the state government.
  • Property costs – You are responsible for the payments, including your home loan, council rates, strata fees and more.

Based on the NSW Government, “As long as a participant remains eligible for the initiative, no repayments are required, and no rent or interest will be charged.”

When you are able to do so, you can make voluntary payments and buy back the government’s share to increase your share of ownership. You can make a minimum payment of 5% of the property value.

What properties are eligible for the Shared Equity Home Buyer Helper?

Those who want to avail of the Home Buyer Helper must buy a home in NSW that meets the maximum property price caps:

  • $950,000 in Sydney and major regional centres (Newcastle & Lake Macquarie, Illawarra, Central Coast and North Coast of NSW)
  • $600,000 in other regional areas of NSW

NSW Shared Equity Home Buyer Helper example

First-home buyer teacher in Sydney

Let’s say Elena is a single teacher in Sydney who wants to buy her first home. If she meets the other eligibility criteria, she can purchase a new home worth up to $950,000 and only deposit as low as $19,000. If the government contributes 40% equity, she’ll only need to take out a loan worth $570,000. In turn, this greatly lowers her monthly home loan repayments.

Single-person homebuyer in Lake Macquarie

Jessica is a 53-year-old potential homebuyer who is single. She wants to buy an existing home in Lake Macquarie worth $500,000. If she qualifies for NSW Shared Equity Home Buyer Helper and the government provides 30% equity, she can deposit as low as $10,000 and not pay LMI. 

Pros and cons of NSW Shared Equity Home Buyer Helper

Keep in mind that low deposit home loans always carry a level of risk, so you need to consider the benefits and drawbacks of shared equity to ensure that it’s the right homebuyer scheme for your circumstance:

Pros of shared equity

  • Be a homeowner sooner – Since the scheme allows you to deposit at least 2% of the property’s purchase price, you don’t have to worry about saving a large deposit to break into the housing market. Instead of paying your rent, your repayments go towards your own home.
  • Avoid paying LMI – One of the biggest drawbacks of low deposit home loans is LMI. With NSW Shared Equity Home Buyer Helper, you can avoid paying LMI since the government covers a share of the property. This saves you approximately thousands on your home loan.
  • Lower repayments – Your monthly repayments will also be lower and more manageable since you only need to take out a smaller loan. You can use our loan repayment calculator to estimate your monthly repayments.
weighing options

Cons of shared equity

  • Changed circumstances – If your situation improves (i.e. your income increases), you will begin your repayments of the government’s equity contribution on top of your home loan.
  • Financial stress – You may suffer financial stress if you use all your savings for the deposit and don’t have a savings buffer.

What other shared equity schemes are available in Australia? 

Aside from NSW Shared Equity Home Buyer Helper, other states and territories offer shared equity schemes that can help you get a leg up the property ladder:

Shared Equity Scheme Victoria: Victorian Homebuyer Fund

EligibilityAustralian or New Zealand citizensPermanent Australian residentsCurrently don’t have an interest in a property in Australia or overseas
Minimum deposit3.5% – Aboriginal and Torres Strait Islander participants5% – Others
Property price caps$950,000 or less – Metropolitan Melbourne and Geelong$600,000 or less – Other eligible regional locations
Income thresholdIndividuals – $128,000 or lessJoint applicants – $204,800 or less

Shared Equity Scheme Qld: Pathways Shared Equity Loan

EligibilityAustralian citizen or permanent resident of AustraliaExisting tenant in public housingNot own or part-own another property
Available propertiesThe one you’re currently rentingAvailable for purchase
Minimum depositAt least $2,000 Monthly repayments will not exceed 35% of your gross monthly income

Shared Equity Scheme SA: HomeStart Finance Shared Equity Option

EligibilityMeet the requirements of a HomeStart primary loan
Maximum loanBorrow up to 25% of the purchase price or property valuation, whichever is lowerYour loan can’t be more than your primary loanCapped at $200,000

Shared Equity Scheme WA: Shared Home Ownership

Minimum deposit2%
Income thresholdSingle – $70,000Couples – a combined annual income of $90,000

Shared Equity Scheme Tasmania: MyHome Shared Equity Scheme

EligibilityAustralian citizen or permanent resident
Minimum deposit2% 
Property price caps$600,000 for existing homes
Income thresholdSingle – less than $87,509 Couples – less than $100,636

Shared Equity Scheme ACT: Shared Equity Scheme

EligibilityPublic housing tenant for at least 3 yearsCurrent head tenant and living in the property you want to purchaseNo rental arrears or pending legal action related to tenancy 
Minimum depositPay 70% of the property upfrontProgressively pay the 30% equity over a maximum of 15 years

Frequently Asked Questions: NSW Shared Equity Home Buyer Helper

How to apply for the shared equity scheme? 

You can apply for NSW Shared Equity Home Buyer Helper starting on 23 January 2023 through the approved participating lenders.

If you don’t qualify for the scheme or want to explore other first home buyer options, you have alternatives, such as guarantor home loans, other First Home Guarantee and other schemes, First Home Owner’s Grant (FHOG), Family Home Guarantee, First Home Buyer Choice and more.

Will I be eligible for other grants or schemes?

Yes. Based on the NSW government, you can still benefit from first-home buyer grants and stamp duty exemptions or concessions as long as you’re eligible.

Is NSW Shared Equity Home Buyer Helper a good idea?

NSW Shared Equity Home Buyer Helper is worth considering whether you’re a first-home buyer or want to enter the property market. Like any other financial commitment, assess your situation and goals to make sure the shared equity scheme is the best choice for you to settle in your own home.

To prepare and control your finance, get in touch with our mortgage brokers to get expert help from the start and beyond. It’s Simple will help you break down your options, enjoy tailored choices from the top 40+ banks and lenders in Australia and help you choose and apply for the right loan solutions that satisfy your goals and needs.

You can email us today at info@itssimple.com.au or book a free expert consultation at your preferred schedule.

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