Can you believe that you could be buying or building your first brand new home with a deposit from as low as 2%? Many young Australians dream of getting out of the rent trap and purchasing their first home however 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 lender’s mortgage insurance premiums. But there is another way…
What is Keystart?
Keystart Home Loans, an initiative of the Western Australian Government, aims to make the dream of affordable home ownership a reality for more people. Keystart offers lower upfront costs with deposits as low as 2% and no lender’s mortgage insurance.
Am I eligible?
Keystart can assist applicants who are over 18 years of age, an Australian citizen and/or permanent resident residing in Western Australia and looking to purchase their first home. Other criteria including maximum income limits also apply.
What deposit do I need?
Keystart requires a deposit from as low as 2% deposit that can be your own savings or a lump sum of cash as long as you can show that you are able to service the loan. This means, you also have the option to receive a gift from your parents. The maximum purchase value to be eligible for a Keystart loan is $480,000 in the Perth metropolitan area.
What else are first home buyers eligible for?
First Home Owners Grant (FHOG)
In addition, if you build or buy a BRAND NEW HOME (that has never been lived in), you may be eligible for the State Government First Home Buyers Grant (FHOG) of $10,000. Keystart will lend up to 98% of the value of a property, so you may be able to use the FHOG to reduce your total loan amount.
Stamp Duty Concession
Another plus for first home buyers is that if your purchase is less than $430,000, the entire stamp duty will be waived. For purchases between $430,000 and $530,000 there is a concession on the duty paid so you are not paying the full rate. Any purchases over $530,000 are ineligible. The government refers to the rebate as ‘First Home Owner Rate of Duty’.
For more FHOG information, refer to our WA First Home Owner Grant – ALL the facts article.
These scenarios are based on building or buying a BRAND NEW HOME, first home buyers buying an ESTABLISHED home are not eligible for the FHOG.
|Scenario 1||Scenario 2||Scenario 3|
|Minimum deposit required||$7,000||$8,600||$9,600|
|Stamp Duty – Land Transfer||WAIVED||WAIVED||$9,595|
|Council and water rate adjustments*||$2,000||$2,000||$2,000|
|Other miscellaneous expenses*||$1,000||$1,000||$1,000|
|Total deposit plus expenses||$11,702||$13,522||$24,217|
|Customer Contribution required||$1,702||$3,522||$14,217|
|Final Loan Amount (98% of property value)||$343,000||$421,400||$470,400|
*estimate only – fees can vary
Scenarios 1 & 2
As Keystart lend up to 98% of the value of the property, the FHOG and stamp duty exemptions in Scenarios 1 and 2 cover most of the necessary deposit and purchase costs. You will then only need to contribute under $1702 in scenario 1 and $3,522 in scenario 2.
In Scenario 3, because stamp duty is payable, the FHOG doesn’t cover the necessary deposit and purchase costs, and a much higher contribution of $14,217 would be needed. This certainly highlights 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, let us help you get into your first home sooner than you thought possible! Our expert brokers specialise in first home buyers, get in touch for a free consult. Call (08) 9367 4222, [email protected] or fill out the form on this page.