Keystart and How to Get Into Your First Home Sooner

Many young Australians dream of getting out of the rent trap and purchasing their first home, but often the deposit needed can seem like an insurmountable obstacle. Most lenders will require at least a 5% deposit, and even then, they will charge you thousands of dollars in lenders mortgage insurance premiums. But there is another way…

Keystart Home Loans is an initiative of the Western Australian Government which is designed to bring home ownership dreams alive by offering affordable, low deposit home loans with no lenders mortgage insurance.

Keystart can assist applicants who are over 18 years of age, an Australian citizen and looking to purchase their first home. Keystart require only a 1% deposit that must be genuine savings. This means, you cannot borrow the 1% or have it gifted from your parents, you must genuinely save it up. The maximum purchase value to be eligible for a Keystart loan is $480,000, so a 1% deposit is only $4,800. Suddenly, that deposit goal doesn’t seem so far out of reach!

In addition, the State Government recently increased the First Home Buyers Grant (FHOG) to $15,000 for buyers who are purchasing a brand new[1] property. Keystart will lend up to 98% of the value of a property, so you can use the FHOG to pay the balance of the deposit and all other related purchase costs. There is also a stamp duty exemption for first home buyers on purchases of less than $430,000.

This is how it works…

Scenario 1 Scenario 2 Scenario 3
Purchase Price

  $380,000

  $430,000

  $480,000

Stamp Duty – Land Transfer

                    $-

                    $-

        $9,595

Registration Fees              $402              $422              $422
Settlement Fees[2]         $1,300         $1,500         $1,600
Council and water rate adjustments         $2,000         $2,000         $2,000
Other miscellaneous expenses         $1,000         $1,000         $1,000
Total purchase price plus expenses

  $384,702

  $434,922

  $494,617

Less FHOG

  ($15,000)

  ($15,000)

  ($15,000)

Less Customer Contribution (if necessary)

                    $-

                    $-

     ($9,217)

Final loan amount   $369,702

  $419,922

  $470,400

As Keystart lend up to 98% of the value of the property, the FHOG and stamp duty exemptions in Scenarios 1 and 2 cover the necessary deposit and purchase costs. Your 1% genuine savings need not even be used! You just have to show Keystart that you have saved it and it can continue sitting in your bank account earning you interest!

In Scenario 3, because stamp duty is payable, the FHOG doesn’t quite cover the necessary deposit and purchase costs, and a contribution from you of $9,200 would be needed. This is still only a 2% deposit, but does highlight the benefit of staying below the $430,000 threshold to remain exempt from stamp duty.

So, what are you waiting for? Get out of the rent trap today and come and speak to us at Launch Finance and let us help you get into your first home sooner than you thought possible.

[1] Brand new property either means being built or newly constructed

[2] Estimate only – fees can vary