Could Shared Equity Help You Get Into Your Own Home Sooner?

For many Western Australians, getting into the property market isn't necessarily about being able to afford the repayments. Sometimes, it's the gap between what you can borrow and the price of a suitable home that's holding you back.

One option that could be worth exploring is a shared equity home loan.

How does shared equity work?

The concept is fairly simple. Instead of you funding 100% of the purchase price, the WA Government can contribute towards the property and take an equity share in the home.

You then take out a mortgage for your share of the property.

For eligible buyers, the current scheme allows the Housing Authority to contribute up to $250,000 towards the purchase price, helping increase the price range of homes that may be within reach. The current property price limit is $800,000.

The idea is that by owning a smaller share initially, you may need to borrow less, which can also mean lower repayments than if you were borrowing to purchase the entire property yourself.

What are some of the key features?

For eligible applicants, the scheme currently offers:

• A deposit from 2%

• No lender's mortgage insurance

• A government contribution of up to $250,000

• A maximum property price of $800,000

• No monthly account-keeping fees

The property also needs to meet specific criteria. This includes eligible newly built, under-construction or off-the-plan apartments, townhouses, villas and units, as well as certain new builds. Land size restrictions can also apply depending on the property and location.

Is it right for everyone?

Not necessarily. Shared equity can be a useful pathway, but it's important to understand that you aren't simply receiving a grant towards your home. The Housing Authority becomes a co-owner of a share of the property.

Your ownership percentage is determined based on your financial circumstances. Depending on the type of shared ownership arrangement, you may be able to increase your ownership share over time, while other arrangements may have different rules.

There are also income limits and other eligibility criteria that need to be considered.

That's why it's important to look beyond the headline features and understand how the arrangement would work for your individual circumstances.

Could it be an option for you?

If you've been looking at the property market and feeling like your deposit or borrowing capacity isn't quite enough, shared equity could be one pathway worth investigating.

It won't be the right solution for everyone, but it may open up possibilities that you hadn't considered.

At WestGen Finance, we can help you understand the different pathways available and work through the options based on your income, deposit, borrowing capacity and property goals.

The right home loan isn't necessarily about finding the biggest loan you can get. It's about finding a solution that makes sense for your circumstances and your longer-term plans.

If you're unsure what's available to you, get in touch with WestGen Finance for a conversation about your options.

Eligibility, lending criteria, income limits, property requirements and other conditions apply. Information is general in nature and should not be relied upon as personal financial advice. Current scheme settings may change.