2% deposit scheme ‘Help to Buy’ launches

Imagine being able to buy your own home with just a $12,000 deposit. That’s what the federal government’s new Help to Buy shared equity scheme can offer. But there are some pros and cons to be aware of. Let’s take a look.

Think back to 2022. That’s when the Labor government first proposed a new Help to Buy scheme. 

It sparked plenty of interest back then. But three years is a long time to wait for anything, and chances are plenty of would-be home buyers have now forgotten about it ahead of its December 5 launch date.

Below we explain how Help to Buy works, and weigh up the potential benefits and drawbacks. 

How Help to Buy works

Help to Buy is unlike any other scheme currently available. 

It doesn’t offer a cash handout like the First Home Owner Grant.

And it goes beyond the 5% Deposit Scheme, which sees the government guarantee a first home buyer’s mortgage, so they can buy with a small deposit and avoid lenders mortgage insurance.

Instead, Help to Buy is a shared equity scheme. 

Eligible home buyers only need a 2% deposit. From there, the government contributes up to 40% of the purchase price of a new home and up to 30% for existing homes, in exchange for an equity stake in the property.

Here’s an example.

Olivia is a first home buyer. Using Help to Buy, she purchases an established home costing $600,000. 

Olivia pays a 2% deposit of $12,000, and takes out a home loan for $408,000.

The government chips in $180,000 (30% of $600,000). 

In this way, Olivia is able to pay the full $600,000 purchase price. 

Help to Buy may benefit Olivia in two key ways.  

First, it takes less time to save a 2% deposit than a 5% or 20% deposit. So Olivia can bring forward her home buying plans. 

Secondly, because the government pays 30% of the purchase price, Olivia can take out a smaller home loan, which lowers her regular loan repayments, making home ownership more affordable. 

Who is eligible for Help to Buy?

While Help to Buy is chiefly pitched at first home buyers, it’s also available to those returning to home ownership.

Along with the need to have at least a 2% deposit, income limits apply. Singles can earn up to $100,000 annually, or up to $160,000 for single parents and couples combined. 

There are caps too on the value of properties that can be purchased under the scheme. These vary between states and territories as well as between metropolitan centres and regional locations.

Talk to us to find out if you’re eligible. 

What to weigh up with Help to Buy

As we’ve noted, Help to Buy offers an opportunity to buy with just a 2% deposit, pay zero lenders mortgage insurance, and get started on the property ladder with a smaller home loan.

No rent or interest is owed on the government’s equity stake, though home buyers still pay upfront purchase costs such as stamp duty and legal fees.

The chief downside is that at some stage the government expects to get its money back. 

Home owners using Help to Buy can repay the government’s 30% or 40% equity stake through either voluntary repayments, or from profits on the sale of the property, or when they have the money to do so at some future date, for example, by borrowing the funds.

But it’s important to know the fine print.

Home owners aren’t just expected to repay the government’s initial contribution. 

The government’s share of a home is linked to the value of the property at the time of paying out the government’s stake. 

Put simply, the government scores a slice of any profits made on the sale of a home in line with its equity stake. 

Completing renovations can be more complicated too.

For any major home improvements, Housing Australia (which oversees Help to Buy) will organise a valuation both before and after the renovation. 

While this ensures the home owner – and not the government – pockets any value-add from renovation spending, it does mean more hoops to jump through.

One further drawback – for now at least, is that very few lenders are participating in the scheme. More are expected to join from early 2026.

Talk to us to find out more

Help to Buy is currently limited to 10,000 home buyers each year.

As a new and very different way of helping home buyers, time will tell how Australians feel about sharing equity in their home with the federal government.

In the meantime, if you’re a first home buyer or returning to home ownership, talk to us about the various options to help you get started in the market.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Why now may be the time to buy a rental property

2025 has been a big year for property investors. But the rapid growth of investment lending has fuelled speculation about a possible crackdown on loans to property investors. We explain what’s happening, and why it might be worth considering bringing forward your plans. 

The past year has been a cracker for property investors. 

The tightest vacancy rates on record have seen a pick-up in rental growth.

Interest rates on investment home loans are at their lowest since late 2023. 

And to top it off, property price growth nationally has hit the fastest pace in over two years.

No wonder investors are buying up property in record numbers.  

But as lending to investors hits the fastest pace in a decade, our bank regulator – the Australian Prudential Regulation Authority (APRA) – is watchful. 

Some commentators are even suggesting APRA could clamp down on investment lending in a bid to cool property price growth. 

Here’s what you need to know if buying a rental property is on your wish list.

Investment lending outstrips mortgages to owner occupiers

There’s no doubt about it, investors have been a driving force in the property market this year.

The September quarter alone saw a 13.6% rise in the number of new investment loans. 

That’s 57,624 new investment home loans in the space of just three months – the highest number since early 2022. 

Zooming out a little further, the past year has seen lending for investment properties outstrip growth in home buyer loans, according to ABS data. 

So what’s the problem?

What’s worrying APRA are potential signs of a pick-up in riskier lending, in particular what it describes as “high debt-to-income borrowing by investors”.

Here’s the red flag for would-be investors.

In a recent report, APRA warned it is “ensuring banks are prepared to implement additional macroprudential tools where required to reinforce lending standards”.

In plain English, APRA is reminding banks that as the industry regulator, it can, and may, change the rules around lending to property investors – a step it has taken in the past. 

The lessons of 2014–2018

2014 might seem like a lifetime ago.

However, seasoned property investors may recall 2014 as the year APRA aimed to gently cool the property market by limiting annual lending growth to property investors to 10%.

APRA further tweaked the rules by imposing a 30% limit on interest-only loans, which are typically favoured by investors.

The regulator eventually relaxed its investment lending restrictions in 2018. 

Could history repeat?

Property market conditions back in 2014 were similar to those we see today. 

Values were rising fast, interest rates were on a downward trend, and household income growth was sluggish. 

This has fuelled speculation that APRA may introduce new regulations for today’s generation of property investors. 

What it could mean for your investment plans

The decision to buy an investment property should never be rushed. 

That said, if APRA does tighten lending policies, investors who delay their decision could find they have missed the boat due to changes to their borrowing power or lender restrictions. 

So, somewhat ironically, APRA’s latest warnings may just spur some investors to bring forward their buying plans. 

If you’re keen to become a property investor or expand your portfolio, get in touch with us today.

We can help you assess your borrowing capacity as it currently stands, and provide insights into the different funding options that could help you invest.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

5-year goal: 1-in-3 Gen Zs planning to buy a first home

Gen Z may be known for being tech savvy, but they’re also showing their smarts when it comes to home buying, with a surprisingly large number preparing to buy their first home before the end of the decade. Here’s how Gen Zs are making their home-buying plans happen.

They don’t call it the ‘great Australian dream’ for nothing. 

Owning a home remains a leading goal for many Australians and a recent Westpac survey found more than one in three (35%) Gen Zs – that’s chiefly people aged in their 20s – plan to buy their first home in the next five years.

That’s a 5% increase since the start of the year, and signals a growing wave of confidence among Gen Z home buyers. 

What’s driving the jump in home-buying optimism?

Let’s take a look. 

Why more Gen Zs are determined to buy a home

First and foremost, almost two in five (37%) say they want to be more independent. Fair enough too – years of living in the family home, or answering to a landlord, can make a place of your own very attractive. 

More than one in three (34%) Gen Zs are keen to buy a home as a way of feeling more financially secure.

About the same proportion (32%) simply want to get off the rental treadmill. Makes sense. Why pay rent when you could be paying off your own home?

What they’re doing to meet their goal

The overwhelming majority of Gen Z buyers – about eight in ten – are boosting their deposit by fine-tuning their lifestyle, making fuss-free changes such as cutting back on food deliveries and other non-essentials to save money.

Faced with a shortage of homes listed for sale, Gen Zs are also playing it smart by broadening their search. Four in five (80%) say they’re happy to consider suburbs they hadn’t previously thought of.

Gen Zs are also keeping their options open when it comes to the type of home they’ll buy. 

Plans to buy an apartment, which can have an affordability edge, have jumped 2% since the start of the year, while interest in buying a house has cooled slightly.

More than half (55%) of Gen Z buyers are even considering rent-vesting – making their first property an investment, while choosing to rent where they want to live. 

What deposit are Gen Zs aiming for? 

There’s no getting around the fact that today’s high property prices can be a hurdle when it comes to saving the traditional 20% deposit.

So Gen Z buyers are leaning towards a different solution: buy with a smaller deposit. 

Over half (53%) of 20-something first home buyers are moving ahead with plans for a deposit of 10% or less.

The good news is that this has become a lot easier thanks to the newly expanded Australian government 5% Deposit Scheme. It lets eligible buyers get into the market with as little as a 5% deposit and zero lenders mortgage insurance. 

Let’s develop your first home strategy

Buying your first home doesn’t have to be a pipedream. 

With a clear savings strategy, the backing of government support schemes, and a home loan that is a great match for your needs, home ownership can be achievable. 

Contact us today to start the path forward to buying your first home. You could be in a place of your own sooner than you think!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Australian home owners focus on paying down debt

To save or to pay down your home loan, that is the question. Ok, so it’s not Shakespearean levels of contemplation – but it’s still a big decision facing many Australian families right now. Let’s take a look at what the majority of home owners are leaning toward.

A growing number of home owners have given up waiting for rate cuts and are making home loan savings of their own – by knuckling down to reduce their mortgage balance.

A survey by Agile Market Intelligence found 69% of home owners – the highest percentage this year – are making it their top priority to get ahead with their home loan. 

Let’s take a look at why so many are deciding to do so.

Interest rates

The interest rate you pay on a home loan will most likely be higher than the rate you’ll earn on a separate savings account. 

No surprise there – charging loan interest is one of the key ways banks make money.

So, by paying down your loan sooner, you can typically save more in loan interest charges than the interest you could earn on personal savings.

Better still, the sooner you start paying down your loan, the more interest you can save over time, and the earlier you become debt-free.

That’s because every extra dollar that goes into your home loan comes straight off the loan balance. This in turn lowers the next month’s interest charge. 

But as your regular repayments stay the same, more of the next month’s repayment goes towards reducing the loan balance.

In this way, the loan pendulum can start to swing more in your favour, and you can really get stuck into reducing your home loan balance. 

Increased equity

When you reduce the amount owing on your loan, your home equity usually increases (so long as the value of your home doesn’t dip in value).

And the more equity you have, the more opportunity you could have to refinance to a lower interest rate loan (there’s more savings for you) or to tap into your home equity to achieve other goals, such as investing in a rental property. 

Ways to pay down your home loan sooner    

We understand that today’s high living costs mean home owners don’t always have a lot of spare cash to throw at their mortgage.

That’s okay. 

It’s possible to pay off your loan sooner – and save on interest charges – even when cash is tight. 

Here are some ideas to get you started.

1. Pay more often 

Paying half your monthly repayments every fortnight (rather than monthly) means you’ll end up repaying the equivalent of 13 monthly instalments each year instead of 12. 

This extra month’s worth of repayments can make further inroads on your home loan balance, and paying fortnightly may also be easier on your cash flow, especially if you can sync repayments up with paydays.

2. Add lump sums

Lump sum payments on your home loan can accelerate its reduction.

That can make it worth depositing tax refunds, end-of-year work bonuses, or other ‘windfalls’ straight into your home loan. Chances are you’ll never miss what you’ve never had.

3. Consider an offset account

An offset account can let you use spare cash to pay off your loan sooner. 

The balance of the linked offset account is deducted from your loan balance when monthly interest is calculated. This reduces the monthly interest charge, so more of each repayment whittles away the loan principal. 

Talk to us to know if an offset account is suitable for you. 

4. Check the rate you’re paying 

No matter how hard you work to pay off your home loan sooner, you could be behind the eight ball if you’re paying a higher interest rate than necessary.

For context, the Reserve Bank says the average variable rate is about 5.5%. But according to Mozo, there are plenty of lenders offering a lower rate.   

That’s why it’s important not to assume you are paying a competitive rate. 

Call us to organise a home loan review. We can confirm the rate you’re currently paying, and let you know if you could save by switching to a loan with a more competitive rate. 

How to pay down your home loan sooner

Whether you signed up for a 25- or 30-year mortgage, you don’t have to chip away at your home loan for this amount of time.

And really, how good would it be to become mortgage-free sooner?

If paying down your loan is a personal goal, talk to us to find out more ways you could get ahead with your loan.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Time to buy? House prices tipped to heat up this summer

Property prices are running hot as we head into summer, and the market is tipped to dial up even further over the next 12 months. Here’s how it could shape your home-buying plans.

Aussie home values are sprinting into summer, with property price growth hitting the fastest pace in over two years in October.

The price hikes are unlikely to stop there. 

A record nine out of ten (88%) respondents to a recent API Magazine survey expect home prices to climb higher.

It seems the experts agree.

PropTrack believes we could see further price rises over spring and summer, while the Commonwealth Bank says “we still expect further gains” this year.

If forecasts of rising home prices prove accurate – and as we’ll see, there’s a decent chance they could – now could be the time to bring forward your home-buying plans. 

Home prices jump 6.1% in the past 12 months

It’s been a big year for property, with home prices nationally climbing 6.1% over the past 12 months.

Several factors have come together to push home values higher.

Lower interest rates have boosted home buyer demand.

Tight rental markets have fuelled investor activity, with investors now making up around their highest share of lending since 2017. 

Further piling pressure on home prices is the additional demand created by the newly expanded 5% deposit first home buyer scheme.

On the flipside, supply remains tight. And supply doesn’t look like catching up to demand any time soon. New home completions are already 15.6% below average for the past decade.

The bottom line is that the potential for further price rises might be a compelling reason to bring forward home buying plans.

Home price growth is eating away at borrowing power

Buying a home is never a decision that should be rushed.

But with no end in sight to property price gains, now may be time to advance your buying plans. 

Speak to us – we can let you know if you are home loan-ready right now.

This is not about sprinting in to buy the first home that comes along. 

Rather, it’s a matter of making the most of the buying power you have today, because it could be lower tomorrow if home prices keep rising.  

You see, while the Reserve Bank’s interest rate cuts have given households on the median income a $51,000 increase in borrowing power, median home values across our big cities have risen almost $54,000 since February.

Put simply, home prices are rising faster than home buyers’ borrowing power.

Call us to get the ball rolling

An unexpected jump in inflation has put a question mark over possible future rate cuts.

So home buyers can’t rely on future rate cuts for an uptick in personal borrowing power.

A better strategy is to talk to us today.

We can explain if you’re home loan-ready right now, and how to get the ball rolling on home finance before prices rise further.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.