If you want to buy a home in Queensland, but affordability is an issue, then a Pathways Shared Equity Loan might interest you. Shared equity schemes are designed to help people with moderate incomes who can’t afford to pay a mortgage on a total property price but can repay a smaller loan.
What Is A Pathways Shared Equity Loan?
It is a scheme to help those who are living as a tenant in the Department of Communities, Housing and Digital Economy and cannot afford to buy a home. This scheme will help them buy the house they are currently renting in a shared partnership with the government.
Under this scheme, homebuyers must purchase the largest share their income will allow at that time – this must be at least 60%. For instance, if you can afford to repay 70% of the property price, you need to purchase this larger share, rather than the minimum 60%.
You will not be paying more than 35% of your gross monthly income in loan repayments. The amount you borrow, interest rates, and household expenses will determine your monthly repayments.
Further, you won’t be eligible for a loan under this scheme if the department’s assessment shows that you can afford to buy 100% of the property.
What Factors Determine The Size Of Your Equity In The Home You Purchase?
The following factors will determine the size of your equity share in your home:
- Your present-day income and expected future earnings
- Your current cost of living
- Size of your deposit
- The current interest rate
- The present market value of your rental property
Am I Eligible To Buy A Home Under The Pathways Shared Equity Loan Scheme?
You must fulfil the following requirements to buy a home under Pathways Shared Equity Loan.
- You need to be a tenant when applying for a loan.
- You must be a permanent resident of Australia.
- You cannot own another property in part or whole.
- You must not, in the opinion of the department, be able to buy your rental home with a standard mortgage loan.
- You cannot have other debts that affect your serviceability. Also, how you have repaid other loans will be considered when determining your eligibility.
- You need to live in the home that you purchase.
- You must not have any outstanding debt with the department.
Can I Buy Any Property With Pathways Shared Equity Loan?
No, you must purchase the property you are currently renting from the department. Also, not all social housing is eligible for the program. Properties not available for purchase include those in very high-demand areas, sites with potential for future redevelopment, townhouses, units and cluster houses.
Who Is My Home Purchasing Partner?
On behalf of the State of Queensland, the department will co-own the property with the homebuyer. A homebuyer will own a minimum of 60% of the property, while the department will own the rest.
Frequently Asked Questions About The Pathways Shared Equity Loan Queensland
Homebuyers need to pay a minimum of $2,000 as a deposit on their loan. The deposit must be your cash savings, you cannot use gifted or borrowed money; however, if your rental history shows you have consistently paid your rent on time, the department might reduce your minimum cash deposit amount.
Your present income before tax will be used to calculate the size of the initial share of the home you can afford to purchase. The inclusion of overtime or penalty rates in the income assessment will depend on the nature of your employment. Overtime is an integral part of the job in some industries, and regular overtime and shift allowances might be included while assessing your income.
Yes, you can make improvements or alterations to your home. Since the Queensland Government co-owns the property, you need to get approval from the department.
Yes, you can purchase more shares of your home from the department by either paying cash for the additional shares or renegotiating your loan with your department if your circumstances allow. The department won’t charge fees to renegotiate your contract, but you need to pay the cost of registering the new mortgage with the Title Office.
You must buy additional shares worth at least 5% of the property at a time. The price will be determined by your home’s market value, which an independent valuer will determine. The department will bear the cost of valuation. Property generally appreciates with time, so you might be paying more to buy an additional share of the house in future.
The Pathways Shared Equity Loan isn’t transferable and is available only to the original applicant/s. Upon your demise, the property will be sold to repay the loan, and your estate will receive any proceeds from the sale to which it is entitled.
We Are Here To Help!
Want to know if you are eligible for the Queensland Pathways Shared Equity Loan? Get in touch with our experienced mortgage brokers to discuss your situation. Call us at 1300 889 743 or complete our free online assessment form today!
Our specialist mortgage brokers will assist you in applying for the scheme and make the process smooth. Even if you do not qualify for this scheme, other options, like the Help to Buy Scheme, and Guarantor Home Loans, are available. We will help you find the plan that best suits your needs.