Your Guide to the Victorian Homebuyer Fund
August 2024 in Money Matters
Buying or building a new home in Victoria?
ABOUT THE FUND
The Victorian Homebuyer Fund is a shared equity scheme provided by the Victorian Government.
This means the government can contribute up to 25% of the purchase price of your home.
The contribution reduces the amount you need to borrow from an approved lender and your mortgage repayments.
For Aboriginal and Torres Strait Islander homebuyers, the government can contribute up to 35%.
One of the approved lenders will be your point of contact through the process, help you with your application paperwork, and let you know if the application has been approved.
To get there, you’ll need to check your eligibility.
ELIGIBILITY CRITERIA
To qualify for the Victorian Homebuyer Fund, you must meet several conditions:
1. Australian Citizen or Permanent Resident: You must be an Australian or New Zealand citizen or permanent Australian resident.
2. Your Age: You must be at least 18 years old.
3. Income Limit: From 1 June 2024, your gross annual income must not exceed $135,155 for individuals (excluding single parents) or $216,245 for single parents or joint applicants.
4. Property Type: The property must be a standard residential property in Victoria, such as a house, townhouse, unit, or apartment.
5. Ownership: You must live in the home as your primary place of residence.
6. No Existing Property Ownership: You must not own an interest in any land in Australia or overseas at the time of purchase.
APPLICATION PROCESS
1. Check Eligibility: Have you checked you meet all the eligibility criteria?
2. Find a Property: Look for a new home that suits your needs and fits within the fund's guidelines. The property must be $950,000 or less in Metropolitan Melbourne and Geelong, or $700,000 or less in regional Victoria.
3. Apply Online: Visit the State Revenue Office (SRO) Victoria website to submit your application. You will need to provide personal details, financial information, and details about the property you wish to buy.
You can choose from four lenders: Commonwealth Bank of Australia, Bendigo Bank, Bank Australia, and Indigenous Business Australia.
4. Wait for Approval: The SRO will review your application and notify you of the outcome. This process may take a few weeks.
5. Secure a Loan: If your application is approved, you will need to secure a home loan for the remaining purchase price from your lender.
FINANCIAL CONTRIBUTION
The Victorian Government can contribute up to 25% of the purchase price of your home.
You’ll need to cover the remaining 75% or more, plus stamp duty and other costs where applicable.
Example: For a home valued at $600,000, the government can contribute up to $150,000. You will need to secure a loan for the remaining $450,000.
BUYING AT AUCTION
Yes, you can buy at an auction, but it comes with the risk of paying too much or going over the price cap.
After signing a contract of sale (either private sale or auction), the Valuer General will assess the value of the property.
If the value is equal or above the sale price the application will be approved. If the value is below, the onus is on the purchaser to make up the difference between valuation and sale price.
If you go over the price cap relative to your circumstances and location of purchase, your application will not be successful.
THE ONGOING OBLIGATIONS
1. It must be your primary residence: You must live there.
2. Repay Government Contribution: Over time, you will need to repay the government's contribution. This can be done through refinancing, selling the property, or making voluntary payments.
3. Maintain the Property: You are responsible for maintaining the property and keeping it in good condition.
4. Insurance: You must have adequate home insurance to protect your investment.
The Australian Government’s Home Guarantee Scheme is another option where you only need a 5% deposit.
There’s no shared equity, instead Housing Australia will guarantee 15-18% of the price with the participating lender.
Many more lenders participate in the Australian Government scheme.
The Victorian Homebuyer Fund offers another opportunity for home buyers to enter the property market with reduced financial pressure.
For more information about the Victorian Homebuyer Fund and to apply, visit the State Revenue Office (SRO) Victoria website.
This documents strictly contains general information only, and is not legal, financial, or other professional advice, nor is it intended to be anything other than general information. All information shared is readily available to the public online. Should you require such professional advice before making any decisions, it is highly recommended that you do obtain such advice.