How the 2% Deposit Scheme Works

Buying a property with a smaller deposit can be difficult, which is why schemes like the Australian Government's Help to Buy scheme have gained attention. Under the scheme, eligible buyers may be able to purchase a property with a 2% deposit, take out a mortgage with an approved lender, and receive an equity contribution from the government of up to 40% of the property value. For example, if you wanted to purchase an $800,000 property, a 2% deposit would be $16,000. You would then have a $544,000 mortgage with an approved lender, while the government could contribute the remaining $240,000, representing 40% of the property equity. The government contribution can be repaid over time through voluntary repayments, or it can be repaid when the property is sold, where 40% of the sale proceeds would go back to the government. The scheme can provide a pathway for eligible buyers to enter the property market sooner, but it's important to understand the conditions that come with a shared equity arrangement. Because the government owns a portion of the property, there may be restrictions around certain decisions, such as significant renovations or changes to the property, which may require approval. Understanding both the benefits and limitations of the scheme is essential before deciding whether it suits your circumstances. General advice only. Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).

Disclaimer || The information provided in this post is general in nature only and does not constitute personal financial advice. Amy Lehmann is an Authorised Representative(No. 1292710) of AFSL 495401.