The Catch Behind the 2% Deposit

Buying your first home can feel out of reach, especially when saving for a large deposit is the biggest hurdle. The Australian Government's Help to Buy scheme is designed to help eligible buyers enter the property market sooner. Under the scheme, eligible participants may be able to purchase a property with as little as a 2% deposit. The government then contributes up to 40% equity in the property, while the buyer takes out a mortgage for the remaining portion. There are a range of eligibility requirements that need to be met, including using an approved lender and purchasing a property that meets the government's criteria. The goal of the scheme is to help people buy a home sooner by reducing the amount they need to borrow upfront. The government contribution is not a loan with regular repayments. Instead, the government retains its share of the property equity. This means that if the property increases in value, the government's share also increases. For example, if the government owns 40% of the property, 40% of the sale proceeds would generally need to be repaid to the government when the property is sold. Alternatively, eligible homeowners may be able to make voluntary repayments over time to buy back the government's equity. While the scheme can help reduce the barrier of entering the property market, it's important to understand how the shared equity arrangement works and how it may affect your future financial position. 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.