Owning a home could soon become a reality for more South Australians with a state-government backed lender lowering their minimum deposit requirements.
- The HomeStart graduate loan has dropped their minimum deposit from 3 per cent to 2
- The scheme is available to South Australians with a Certificate III or higher qualification
- The lender is a South Australian government organization providing home loans
Eligible graduates will be able to apply for a home loan with HomeStart Finance with as little as 2 per cent deposit.
Successful applicants will not need to pay lender’s mortgage insurance — required by most lenders if home buyers do not have 20 per cent deposit — potentially shaving off thousands of dollars in upfront costs.
Dwelling prices in July have grown for Adelaide, Perth and Darwin while other Australian major cities dropped as interest rates surge.
Treasurer Stephen Mullighan said the loan could wipe months off savings plans of people trying to buy their first home.
“Rather than South Australians having to spend years and years trying to save 20 per cent deposit to get a loan with one of the big four banks, instead that time is now reduced perhaps to only months,” he said.
Mr Mullighan said the deposit reduction for the HomeStart scheme would allow low-to-medium income earners an opportunity to compete at auctions.
He said the government was expecting the Adelaide housing market to stabilize as interest rates rise.
“Even though some of the heat is going to be coming out of the market, for the first time we’re going to be seeing South Australians armed properly so they can compete in the market,” he said.
He estimates more than 250,000 South Australians with a Certificate III or higher qualification will be eligible for the scheme.
The previous minimum deposit required for that loan is 3 per cent.
For a $400,000 home, loan applicants will only need to fork out $8,000 in deposit and for a $850,000 price tag, buyers will pay $17,000 instead of $25,500 in deposit.
Electrician Robert Thiel and hospitality worker Beth Mayfield, who are currently renting at Lockleys, say the change will help the couple get into the housing market sooner.
“Any amount you can save as a potential home owner is life-changing,” Ms Mayfield said.
“I never thought it would be possible for myself, to be honest, so it’s really exciting that it might be something really attainable for us.”
Ms Mayfield said her rent has increased in recent months, encouraging her to consider becoming a home owner.
The HomeStart graduate loan will be offered from Tuesday.