Victorian Homebuyer Fund Experiences

Caerdyddblue on 05/07/2022 - 17:33
Last edited 05/07/2022 - 18:06

Hi everyone,

Me and my partner are looking at buying an apartment in the inner suburbs of Melbourne, a friend sent me a link to the Victorian Homebuyer fund but I thought I would see if anybody had any experience with it and how quick/simple it is as a process?

I also had a random idea and I know it's not supposed to be the aim of the scheme but as this is Ozbargain…. but as the VIC government put in 25% after your 5% deposit, is there anything stopping you adding an offset account in the application and adding any remaining deposit into it? With the rising interest rates any help offsetting the amount of the loan we pay interest on helps massively.

E.G of what my thinking is
500k value,
5% percent deposit $25k,
25% Gov deposit $125k = $350k loan amount
Remaining 15% of initial deposit $75k in an offset account
= paying interest on $275k loan as opposed to a $400k without Victorian Homebuyer fund?

I saw mentioned online that if for example you sell or paydown the governments share in 2+ years time they value the property as to work out their share? So if you bought an apartment for $500k and when you sold/paid down it was valued at 600k instead of paying them back their 25% (125k) we would owe them 150k? I've included the case studies as an example but it seems insane.

However on the flip side if the property value falls then you would pay back less and the Government would take a loss? As apartments in Melbourne are likely to drop it could still work out as a decent deal.

https://www.sro.vic.gov.au/homebuyer/frequently-asked-questi…
https://www.sro.vic.gov.au/homebuyer/homebuyer-fund-case-stu…

Thanks for any feedback!

Financial

Comments

  • Drakesy on 05/07/2022 - 17:53
    +2

    Not related, but playing with fire buying an apartment in Melbourne over the next year tbh.

    That combined 20% deposit could quickly be eaten up and you'll end up on LMI. This scheme just screams throwing money at a bubble wanting to burst.

  • Unorthodox on 05/07/2022 - 18:37

    Seems about right but I think you'd need to read the conditions more and consider why you would want to have a loss on your property? You'd still be taking a cut off the deceased value when you realise it as a loss at sale.

    I also think they would not always meet the 25% if you have sufficient deposit/capital… And morally you probably don't need the program if you think you can pay it off in two years. (Also would be worth checking if you can pay off the entire bank loan and keep the government share as government owned… I'm sure they would have some sort of condition that you pay off that portion as well).

  • tsunamisurfer on 05/07/2022 - 19:40
    +3

    I would prefer these co-ownership schemes with the government be structured so that the taxpayer cannot lose equity.

    If the gov chipped in 100k then they must own 25% or 100k whichever is more at disposal.

    Why do I think that? The government does not charge them rent for that 25%, they should. So the homeowners are getting a massive leg up.

    • Mechz on 05/07/2022 - 20:21

      That's the point though, it needs to be a leg up without inflating prices which I think it does.

  • jimbobaus on 06/07/2022 - 16:10
    -1

    So you have enough deposit for 20% loan but you still want the Victorian Governennt to chip on for you?

  • wetsandwich on 09/05/2023 - 14:05

    Did you ever go ahead with this?

    I am trying to get approved for it via Commbank, but the State Revenue Office are unresponsive and it's been almost 3 weeks (they claim to take 5 business days).

    • Caerdyddblue on 09/05/2023 - 14:56

      No I didn't, our mortgage broker really put us off it which is hardly surprising as it would have affected her commission amount.

      Are you using the scheme the way it is supposed to be used or withholding some of your deposit as I mentioned?

      • wetsandwich on 09/05/2023 - 15:30

        I have a large deposit and low-medium income which is really the opposite of how the scheme seems to be designed (for decent income but very low savings people). I will ask for an offset account and end up putting about 10-15% of the purchase price into that. Then when the loan gets very low, I will start to refinance to buy back some of the government equity in the property.

        The whole process is a ballbreaker though. I feel like I've wasted over a month of inspections, dealing with agents etc, while constantly waiting on someone else to do something before I can actually make an offer, and I'm no closer at all to that as the SRO have just told me no application was ever submitted.

        • Caerdyddblue on 09/05/2023 - 16:54

          Sounds very similar to my scenario and my thinking of how to get around the requirements. I had a feeling it would be a painfully drawn out experience and we were keen to get on the ladder asap pushing us to just doing it the "regular" way. Fingers crossed for you and let me know how you go! Will save $$$$ if it works out :)

          • wetsandwich on 10/05/2023 - 10:30

            @Caerdyddblue: Will do!

            I am trying to buy the most rent-friendly 2bed2bath apartment I can possibly afford (which is $500-600k in richmond/hawthorn/footscray with rental appraisals of over $600pw for the whole place), rent out the 2nd room (legal as long as i live there myself), and when I've paid it down over many many years it will hopefully remain a good cash cow that I can run purely as an IP once I pay out the government portion.

            The extra homebuyer money buys extra rental income, otherwise I'd just buy something cheaper with 'real' money to avoid all the restrictions, but long term, I think it's worth dealing with it all to jump straight to a middle tier place.

  • JeffAhm on 31/05/2023 - 21:48

    I have pre approval from SRO to chip in 25%, my worry is about the valuation which will be done by Vic gov. If valuation is less than my offer price I will be in prob. I don't have 20% diposite that's why I am thinking it's a good option to share equity with Gov as I
    Don't have 15% more deposit or LMI. As I will be borrowing 70%,definitely I will be saving on interest in current market.

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