What Is The Shared Home Ownership Loan?
The Western Australia Shared Home Ownership is a shared equity scheme initiative that helps you buy your dream home sooner if you are struggling to save a large deposit to buy a home in WA. It was launched in 2011 by the state government of Western Australia. Keystart is a lending partner for this scheme.
How Does It Work?
The Housing Authority, through Keystart, funds up to 30% of a property’s purchase price. This means you will need a loan only for the remaining share. For example, If the authority funds you 25% of the purchase price under this scheme, Keystart will help you get a loan for the remaining 75%. In this way, you will be able to reduce your monthly loan repayments. The authority decides its funding amount based on your borrowing power.
You also don’t have to wait to save a 20% deposit to get the loan. A deposit as little as 2% works under this scheme.
The Housing Authority acts as a silent partner and co-owns the home with you. It owns a certain percentage of your home based on its funding amount. You need to repay the loan for your share, the costs of general maintenance and any other expenses associated with buying a home, such as insurance premiums and additional fees. Let’s look at an example:
Henry is looking to purchase a property worth $300,000. He has qualified for a Shared Ownership Home Loan, and the Housing Authority has decided to purchase 25% of the property value ($75,000). His share of the property will be 75% ($225,000). Keystart will provide him the loan with a deposit of only 2% ($4,500). The total loan amount with Keystart will be $220,500 plus its fees.
Types Of WA Shared Home Ownership Loans
Flexible Shared Ownership
This loan allows you to increase your shares in the property by refinancing or purchasing more shares as long as your financial position allows. You can fully own the property with this option.
Fixed Shared Ownership
The share of the property the Housing Authority owns will always remain the same. You cannot increase your shares in the property by refinancing or purchasing further shares. You may sell it back to the authority if you wish. The benefit of this option is the value of your share increases if the property value increases. The increase in equity will help you purchase another home if you sell the property. But, you will never own your property outright with this loan.
Note: Fixed shared ownership loans are currently applicable only for properties in specific locations within the Perth Metro Area. This helps the Housing Authority retain properties in key Perth locations to maintain housing affordability.
How Can I Apply For Shared Home Ownership Loans In WA?
- First, see if you qualify for Keystart’s Shared Home Ownership Loan by visiting its website.
- If you qualify, you can apply and wait for conditional approval.
- While waiting, you can view the available properties on the Opening Doors website. A range of homes is available, from one-bedroom apartments to family-sized dwellings. Contact the authority if you can’t find one that fits your needs.
- Once you have conditional approval, select your home and submit your offer.
- The Housing Authority will determine its level of funding by assessing your borrowing power, and Keystart will loan you the remaining portion.
- You must be an Australian citizen or permanent resident above 18 years old.
- You must be living in Western Australia.
- You must be a first-home buyer.
- Owner-occupiers only.
- Singles earning up to $70,000 a year and couples or families with a combined annual income of up to $90,000 are eligible to apply.
- Your total loan amount is lowered because the Housing Authority covers a certain portion of the cost of the property. This results in lower monthly repayments.
- You can purchase your first home with a deposit of only 2%.
- No Lenders Mortgage Insurance.
- No genuine savings are required.
- Own your property outright on a Flexible Shared Ownership Loan.
- You can use your First Home Owner Grant (FHOG) towards your deposit if you build.
- You don’t have to pay stamp duty on Opening Doors properties priced below $430,000.
- You have to keep making monthly repayments for a property you don’t fully own.
- Only for first-home buyers and owner-occupiers.
- Those who exceed the income limit cannot apply.
- If you have a Fixed Shared Ownership Loan, you will never own your property outright. If you want to sell the property, you must sell it back to the Housing Authority.
- Only principal-and-interest home loans.
- If the value of the property increases, you have to share the increase in equity with your co-owner.
- Despite the fact that you only have part ownership, you have full responsibility for general maintenance costs, insurance, strata levies, and other fees.
- Guarantor loan: Helps you get a home loan by using your parent’s property as collateral. You don’t need a deposit.
- No-deposit home loan: You can use your equity, gifts, personal loans, and superannuation funds to get a home loan with no deposit.
- Low-deposit home loan: Helps you get a home loan with a low deposit if you have a good income, stable employment, good credit history, and a strong asset position.
- First-home buyer grants and schemes: Nationwide schemes will help first-home buyers get a home loan with a deposit as low as 2%.
What Are The Eligibility Requirements For The WA Shared Home Ownership Loan?
Is The WA Shared Home Ownership Loan A Good Option?
Pros
Cons
Frequently Asked Questions About The WA Shared Home Ownership Loan
Is The Shared Home Ownership Loan A Good Idea?
If you don’t have enough money to buy your first home, it can provide an affordable route.
How much deposit do you need?
You can apply with as little as a 2% deposit.
Can I Increase My Share Of A Shared Ownership Property?
Yes, you can purchase as many shares of your home as you want if you have a Flexible Shared Ownership Loan. By doing so, you are reducing the Housing Authority’s share of your home. But you need to consider your financial situation.
Can you be kicked out of shared ownership?
You cannot be kicked out as long as you are making the monthly repayments for your home loan. You are the owner, and the Housing Authority is just retaining some share of the property.
Is it hard to sell a shared ownership property?
No. If you have a fixed shared ownership option, you can only sell it back to the Housing Authority. This reduces the selling time and costs, as you would not need to pay marketing fees, property listing fees, or commission fees. If you are under a flexible option, you are free to sell the property after you buy a 100% share of your home.
Can you make a profit?
Yes. If the property value increases, the value of your share of the property also increases. An increase in equity can help you buy another home if you choose to sell the property in the future.
Do you pay stamp duty?
If you are a first-home buyer, you will pay no stamp duty on Opening Doors properties priced below $430,000 and a reduced rate of stamp duty on properties priced between $430,000 and $530,000.
What Are The Other Alternatives?
If you don’t prefer the Shared Home Ownership scheme, you can go for these options that can get you a home loan with no or very little deposit:
Let Us Help You!
It’s best to speak to one of Home Loan Experts’ specialist mortgage brokers to find out more information and eligibility of government schemes in each state and territory. If schemes don’t work in your favour, they can recommend the options that suit you best. Call us on 1300 889 743 or fill in our free online assessment form to allow us help you own your home sooner.
