Victorian Homebuyer Fund

The Victorian Homebuyer Fund is a shared equity scheme enabling eligible homebuyers to receive an interest free contribution of up to 25% towards the purchase price of a property in exchange for the State taking a proportional interest in the property by way of a registered mortgage.

This allows homebuyers to purchase a property with a deposit as low as 5% and avoid paying Lenders Mortgage Insurance. An approved lender then contributes up to 70% of the funds required.

Homebuyers are responsible for negotiating a 5% deposit with the vendor’s real estate agent as the funds required to complete the purchase are not released until settlement.

Bendigo Bank and Bank Australia are currently the only approved lenders. Participants are permitted to refinance over the life of the loan but are unable to increase their borrowings other than in accordance with the hardship provisions stipulated by the National Credit Code or by paying out the State’s interest.

The Victorian Homebuyer Fund is a shared equity scheme. As property prices fluctuate the State’s interest will change accordingly. This means that any gains or losses will be shared between you and the State. In the event that property prices fall, it appears that you would be liable to repay the State’s contribution rather than being responsible for any decrease in the value of its interest.

Voluntary repayments of the State’s interest can be made over time but must be at least $10,000.00 and need to reduce the State’s interest by a minimum of 5%. You are required to obtain the State’s consent to repay, in full, the State’s equity interest in the first two years, or reduce the State’s equity interest to less than 5% within the first two years of ownership.

There are price thresholds, location, numerous eligibility requirements to comply with and ongoing obligations whilst you own the property. It is prudent to obtain legal advice prior to applying so that you understand the nature and effect of the Victorian Homebuyer Fund scheme. 

Please contact our Melbourne Property and Conveyancing team for further information on the Victorian Homebuyer Fund scheme and how it may apply to your particular situation.