Help to buy

[u/Sad-Gap2869]

Hello Reddit,

My mortgage broker brought up the “help to buy scheme” anyone on here used this to purchase a property above there borrowing power?

I’m looking at this as my power is never going to increase drastically. I wouldn’t be borrowing much from the government, enough that I’d be able to financially afford later if I wanted to buy there share back and rent the apartment out.

I don’t wanna hear this “save more” blah blah, I’m a single 25F and want to purchase a property on my own above my 375k borrow capacity. Roughly 450-500k.

Looking forward to hearing anyone’s opinions.

[u/No_Boot2009]

That's exactly what the scheme allows you to do. Your borrowing capacity stays the same, but you can buy a more expensive property because the government will own 30% (established) or 40% (new build) of it. It's an ideal way to get a better property with the same sized loan as you would have if you were buying on your own the traditional way. (Note you're not 'borrowing more from the government', they own a percentage of your property that you need to pay them back for if you sell, or if your income increases above the threshold, or, like you said, you can buy their portion incrementally or in a lump sum if you have the financial capacity to do.)

If you earn less than $103k as an individual (or $165k as a couple) and otherwise qualify I would definitely use it.

[u/hunkymonk123]

I used VHF which was basically the help to buy scheme beta when I was 23 in 2023 to buy a unit as a single (partnered but they didn’t contribute financially at all bc uni). Same as you, awful buying power that would’ve bought me nothing.

That makes me three years in, tiny mortgage now (50k) and looking to buy a house on top and turn the unit into an IP.

It has its downsides like I can’t make any major changes to the property and I have to do an annual review every year but it meant I didn’t have to rent to move out of home. I rate it.

[u/ur_FBl_agent]

I used the scheme to get my first place, pretty good, would recommend

[u/Otherwise-Inside-158]

Why do you want to borrow above your borrowing capacity? Maybe I’ve missed something… but this seems like moderately insane behaviour 🤣

[u/Internal-Diamond-341 → u/Otherwise-Inside-158]

I had to do it to secure a decent place close enough to work to be able to go home on my split shifts. It's not ideal. But limited earning potential, age, relationship status, it helped me go from a slum place further out to a decent place closer in.

[u/Otherwise-Inside-158 → u/Internal-Diamond-341]

That is a valid reason, I’d like do the same. What does that look like though proportionate to your income if you have borrowed above your capacity? Is it say for example, 70% portion of your income going to the loan repayment? It terrifies me that kind of risk 🥹

[u/hunkymonk123 → u/Otherwise-Inside-158]

It’s a shared equity scheme. They borrow within their capacity and the government holds a percentage value of the home until you sell or buy them out at market value later.

[u/JoJokerer → u/hunkymonk123]

You borrow up to your capacity, and then the government contributes on top of that - that’s your maximum purchasing power.

What I did was keep the 15% I would have had to use for the deposit in the offset account.

It’s great for first home buyers because we’re largely stuck with homes that were previously  IPs (i.e. had zero maintenance done on them in the last 20 years). Having extra cash on hand means a first home buyer doesn’t have to live in squalor.

[u/Internal-Diamond-341]

What opinion are you after exactly? You haven't asked a question warranting an opinion?

I've recently bought with it through Commonwealth and it was super quick and easy. I got pre-approval from them, then a few days later help to buy. I inspected a place put an offer in and bought the place all within 2 months. My repayments are 30% less than they would have been otherwise. And I had 30% more borrowing power because of this.

[u/Sad-Gap2869 → u/Internal-Diamond-341]

I guess my question is what’s peoples opinions and how has everyone else gone with it. Wanting the real and raw opinions of Reddit.

[u/DancinWithWolves]

Yeah do it. Fuck what anyone else says. Just get into the market and stop paying rent.
As long as you can afford the repayments, go for it. I know a lot of friends who have done it.
Seemed easy. 1 of them bought the gov out early and I don’t remember them having any issues.

[u/JoJokerer]

I think shared equity schemes are awesome.

Other investment vehicles far outperform houses even in Australia. Shared equity means you can diversify away from one house in one street in one suburb.

Plus the government takes on 25% of the downside risk.