Keystart was established in 1989 to provide low-deposit home loans to West Australians unable to meet the deposit requirements from mainstream lenders. Since this time, Keystart has helped more than 100,000 West Australians, 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 7% 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. Over 160 participants have succesfully completed the program 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 Housing Authority.
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. Approximately 89% of Keystart clients are in excess of their repayments by one month or more. The benchmark proportion of defaulted accounts in the mortgage market has been consistently above 1.3% of a loan book. For this financial year to April 2018, Keystart’s proportion of defaulted accounts is averaging at 1.1%.
- 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 Housing Authority in the form of a dividend, and the Housing Authority uses those funds to fulfil its social housing objectives.
- Surpluses. Over the last five years to 2017, Keystart has delivered over $30 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 Housing Authority. Under the program, the Housing Authority 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.