Keystart was established in 1989 to provide low-deposit home loans to West Australians unable to meet the deposit requirements from mainstream lenders. Keystart reached a milestone in 2014, during its 25th anniversary – it has helped more than 85,000 West Australians, those who never thought they would be able to own a home, access home ownership.
Keystart’s offer is unique in the West Australian home loan market:
- A lower deposit scheme. The deposit required in the metropolitan area is 2% of the property purchase price and up to 10% in regional WA depending on the property price and its location. For first home buyers, the first home owner grant can contribute toward the deposit.
- No lenders mortgage insurance (LMI). LMI is typically required by other lenders if clients fall short of their deposit requirements. Keystart saves clients between $8,000 and $10,000 by charging no LMI.
- No ongoing monthly account keeping fees.
- Education program. This program was implemented in September 2010 and designed to help a growing number of ineligible West Australians (mainly through too much debt) become eligible for a Keystart loan. The program has over 600 participants and has proved successful in its aims since inception.
Keystart is governed by the Corporations Act and regulated by the Australian Securities and Investments Commission. It also has one shareholder: the WA Department of Housing.
What else is different?
- Transitional scheme. One of the objectives of Keystart is to help West Australians access the home ownership market. When clients’ financial circumstances improve, they are free to refinance to a provider that can offer bundled financial solutions that Keystart does not offer (such as credit cards or financial planning services) or other solutions that may support their individual objectives. Almost 80% have transitioned to a private lender.
- Quality loan-book. Over 90% of Keystart clients are in excess of their repayments by one month. The benchmark default rate in the mortgage market has been consistently above 1% of a loan book. Keystart’s default rate has been consistently between 0.25% and 0.5%.
- Full documentation. Keystart maintains strict criteria to ensure its clients can comfortably service a loan and sustain their home ownership journey.
- No government subsidy. No subsidies are provided to Keystart and has not required ongoing financial assistance.
- Strong social dividend. Surpluses are returned to The Department of Housing in the form of a dividend, and the Department uses those funds to fulfil its social housing objectives.
- Surpluses. Over the last five years, to 2014, Keystart has delivered over $300 million in social dividends.
- Income and property limits. Imposing limits on income and property enables Keystart to focus primarily on prospects who have limited options to finance in order to help the Department meet its social objectives.
- Shared Equity Home Loans. These loans are in place to finance the properties under the Shared Equity program offered by the Department of Housing. Under the program, the Department contributes a percentage towards the property purchase price to help an eligible buyer afford the purchase. Keystart provides the loan for the buyer’s portion. The dedicated loans are SharedStart, Aboriginal Home Ownership Scheme, Disability Scheme and GoodStart Scheme.
Clients are exclusively West Australian residents and typically those who cannot meet the deposit requirements from private lenders. In order for clients to be successful with the home ownership journey, it is necessary for them to earn a sufficient income, usually derived from gainful employment (as is the usual requirement from lenders), to meet their home loan obligations comfortably.
A program of awareness has been in progress to reach the community about accessing home ownership through Keystart’s low deposit scheme; however, Keystart does also rely on the word-of-mouth advertising that many clients happily perform.
Interest rate policy
Interest is calculated based on the average of the four major banks' standard variable interest rate (NAB, CBA, Westpac and ANZ). Read more about the interest rate policy.