More people in Victoria should be able to afford to buy their own home following the unveiling of a new State Government-backed scheme to be known as the Victorian Homebuyer Fund (VHF).
According to an announcement made on Friday, the fund’s shared-equity arrangement will make it easier for more people to buy a home by reducing the amount of money eligible participants need to enter the market.
It will also relieve Victorian homebuyers from the extra financial burden of Lenders’ Mortgage Insurance.
The $500-million VHF is expected to support more than 3,000 Victorians become homeowners, and is an expansion of the Government’s $50-million HomesVic Shared Equity Initiative, a pilot program that supported more than 300 households to buy their first home.
Importance of stable and affordable housing
“Stable, affordable housing has always been important, but the pandemic has heightened financial pressures for Victorians and highlighted the value of a having a secure, safe place to call your own,” said Treasurer Tim Pallas.
“It can take years to save for a deposit – through our Victorian Homebuyer Fund, more than 3,000 [people] are expected to enter their own home sooner.”
Eligibility criteria under the VHF will be broader than the HomesVic pilot. Under the new scheme, applicants no longer need to be first-home buyers; they can buy in a broader range of locations, and can have higher household incomes compared to the earlier pilot.
The fund is available to Australian citizens or permanent residents over the age of 18, who currently don’t have an interest in a property and who meet the income thresholds.
Buyers will need only a five percent deposit
Eligible participants require a five percent deposit and the Government provides up to 25 percent of the purchase price in exchange for an equivalent share in the property.
Aboriginal and Torres Strait Islander homebuyers can buy with a lower deposit of 3.5 percent and receive a Government contribution of up to 35 percent in exchange for an equivalent share in the property.
Homeowners can buy out the Government’s share at market value over time if they choose, with funds then reinvested to help other aspiring homebuyers get into the property market.
Eligible participants can purchase in any location in Metropolitan Melbourne and are provided with a range of regional options as well. The value of the property cannot exceed $950,000 in Metropolitan Melbourne and Geelong, while the price cap in Regional Victoria is $600,000.