Cracking into the Australian property market is set to become a little bit easier, particularly for first home buyers across Victoria. With property prices estimated to be $103,400 higher than last year (according to CoreLogic), a new scheme has been introduced to help aspiring homeowners secure a property in Victoria.
The Victorian Government’s new $500 million Homebuyer fund is designed to help thousands of aspiring homeowners get their foot in the property door across the state. Plus, it’s geared towards first time buyers and homebuyers with only a small deposit at hand (as little as 5%).
To help you understand if this first home owners grant in VIC is right for you, we’ve put together a breakdown of everything you need to know about the new Victorian Homebuyer Fund in 2022.
What is Victoria's new $500 million Homebuyer Fund?
Let’s start with the basics about what this first home owners grant in Victoria is all about. In a nutshell, Victoria’s new $500 million Homebuyer Fund is a scheme launched by the Victorian Government in October 2021. It’s aim is to assist more than 3,000 aspiring home buyers to crack the residential property market in Victoria.
This first home owners grant works as a shared equity scheme, with the government making financial contributions towards the purchase price (in exchange for a portion of the property’s value). And as property values rise or change, so will the State’s share or interest in the property.
To make this program happen, the State Revenue Office will oversee the first home owners grant in VIC and team up with lenders to help homebuyers in Victoria access the scheme. When it comes to the question of whether to build or buy your first home, this scheme limits applicants to existing dwellings only (not vacant land).
How to apply for the first home owners grant in Victoria?
Before applying for the scheme you might be wondering how much is the first home owners grant going to cost you.
Homebuyers need to have at least a 5% deposit ready to go, with the Government able to contribute up to 25% towards the property’s purchase price. Aboriginal and Torres Strait Islander home buyers, may be eligible with just a 3.5% deposit and can receive a contribution of up to 35%.
There’s no need to pay fees such as Lenders Mortgage Insurance (LMI), even with only a small deposit up your sleeve.
Cost is not the only consideration here however and applicants will have to meet certain eligibility criteria. Homebuyers should keep the following in mind when applying for the first home owners residential property grant:
- Be an Australian citizen or permanent resident;
- Be at least 18 years of age;
- Have saved the required minimum deposit and earn $125,000 or less per year as an individual, or $200,000 or less per year for couples;
- Intend to live in the property as your principal place of residence.
Plus, there’s also a few rules around where you can purchase a property as part of this first home owners grant in VIC. In a nutshell, the home you buy must be in:
- Metro Melbourne (to the value of $950,000 or less)
- Geelong (to the value of $950,000 or less)
- An eligible spot in regional Victoria (to the value of $600,000 or less)
Along with what postcode you buy in to receive the grant, it’s important you purchase the right type of property - that means making sure you’re planning to buy a house, townhouse, unit, or apartment.
Why was the Victorian Homebuyer Fund created?
If you’re wondering why the government decided to launch this first home owners grant in Victoria, the answer is pretty straightforward. Essentially, the Victorian Homebuyer Fund has one main goal in mind, and that is to help more aspiring homebuyers snag the keys to their first (or next) home.
In light of skyrocketing house prices across the country, getting into the property market has never been more challenging (especially for first home buyers). As an expansion of the $50 million HomesVic Shared Equity Initiative, this first home owners grant in VIC hopes to get thousands of Victorians into their own homes in 2022 (and beyond).
Plus, this scheme isn’t just limited to first time buyers. In fact, buyers can apply to take part in the first home owners grants even if they’ve previously purchased a property (as long as they no longer own it).
In such competitive property market conditions, a first home owners grant in Melbourne and across Victoria has never been more important to ensure everyone has access to safe, affordable housing.
What are the benefits of this new first home owners grant in Victoria?
So, what do you stand to gain by taking part in this first home buyers new scheme in Victoria? In such hot property market conditions, aspiring homeowners are on the hunt for any leg up they can get to speed up their home buyer journey.
As property prices reach record new heights in capital cities and regional areas across Australia, being able to purchase property with a small deposit can allow buyers to get into the market before prices rise further.
In short, here are the benefits of this first home owners grant in Victoria:
- The Homebuyer Fund gives home buyers a leg up in a competitive, post-pandemic property market with 3,000 spots in the scheme up for grabs. Rather than having to save up a full 20% deposit, this first home buyer's new scheme allows aspiring homeowners to move fast and secure a property with the support of the Victorian Government.
- The Homebuyer Fund allows buyers to purchase a property with a small deposit, ensuring they don’t get priced out of the booming Australian property market.
Plus, the Homebuyer Fund allows buyers with a small deposit to avoid nasty fees and charges such as Lenders Mortgage Insurance (which can easily add up to thousands of dollars).
How to maximize your property purchase through the Homebuyer Fund
While the first home owners grant in VIC requires participants to live in this home as their primary residence, there are ways to use this property purchase as an investment down the road.
Once you’ve paid off this home loan, you might be thinking about renting it out as an investment property. While it’s possible to manage this rental property yourself as a DIY landlord, there’s a reason why 80% of investors choose to hire a property manager in Australia.
With a good property manager, you’ll know you’re setting the right price for rent, selecting good long-term tenants, keeping on top of property maintenance and repairs and getting the best rental yield possible.
Plus, the best property managers take work off your plate as a first-time investor by handling everything from meeting your compliance requirements to routine inspections and chasing rental arrears.
When it comes to the Victorian Homebuyer Fund, this first home owners grant in Melbourne and beyond enables aspiring home buyers to crack the booming property market sooner than otherwise possible. By reducing the deposit size needed to purchase a property, this new scheme allows first-time property owners to skip unwanted fees and get into an affordable property faster.
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