Our unique shared ownership loan may be suitable for you if you're unable to apply for a traditional home loan from mainstream lenders or unable able to afford 100% of the purchase price of the home. This guide covers applying for a shared ownership loan, right through to selling or refinancing your home.
A shared ownership loan is designed to help more people reach their dream of owning a home in an affordable way. With a shared ownership loan, Western Australia's Housing Authority help fund up to a maximum of 30% of the purchase of your home. The Housing Authority will co-own a share of the property with you, acting as a silent partner to help you with the purchase price to get you into home ownership sooner.
A shared ownership loan reduces your ongoing monthly repayments. You purchase a share in your property and the Housing Authority fund up to 30% of your property’s value. The Housing Authority retain a share of the home going forward. Even though the Housing Authority retains a share of your property, the home is still yours. You can increase your share of the property whenever you are able to do so.
Your loan with Keystart will be for your portion only, taking into account any additional associated loan fees.
Sam is looking to purchase a property for $350,000. He has qualified for a Shared Ownership Home Loan with the Housing Authority owning 20% of the property value ($70,000). His deposit will be 2% of the purchase price, which is $5,600. His share of the property will be 80% ($280,000) and his loan amount with Keystart will be $274,400 (80% of $350,000 less the deposit $5,600). He will also need funds for any additional associated loan fees.
At Keystart, we don't adopt a one type fits all’ approach, as every person's situation is different. Our team will work with you to help you find a suitable solution for you depending on your income and household size, whether that's a shared ownership loan or one of our other loan products.
Keystart is the only lender that offers this kind of loan in Western Australia. Our Shared Ownership Home Loan assists you if you are unable to afford a 100% home loan, including if you:
This will be your home, so general maintenance, payments for your rates, insurance, any strata levies and property valuations are solely the responsibility of yourself as the owner.
As a co-owner, the Housing Authority does not require you to pay rent or interest towards their share in the property. You're also able to increase your share of the loan by purchasing further shares when you are in a position to do so.
Note: if you have a fixed shared ownership loan you will not be able to purchase further shares.
Shared ownership loans fall under two categories.
With a flexible shared ownership loan you can refinance or purchase more shares (percentage share) in your property if you are in a financial position to do so.
With a fixed shared ownership loan, the percentage share of the property that you purchase will always remain the same. You are not able to purchase any further shares of your home or refinance to another lender. If you decide to sell your property, it must be sold back to the Housing Authority for the valuation price. This enables the Housing Authority to retain properties in key locations within the Perth Metro area.
If you opt for a fixed loan, while you'll never own your property outright, if your property value increases, so does the value of your share. An increase in equity will be beneficial to you if you choose to sell the property in the future. You can use the equity that has built up in your home loan to assist you in purchasing another home outright in the future.
The real plus with this type of loan is that the Housing Authority will always be there to buy your share from you at its valued price. This reduces the selling time and you won't need to pay marketing fees, property listing fees or commission fees to a real estate agent as you would with a traditional house sale.
We encourage you to purchase more shares in your home when you are in a position to do so. By purchasing more shares, you are reducing the Housing Authority's share of your home. You are moving towards managing a loan for 100% of your home.
You can purchase as many shares as you wish, with a minimum that you can opt to purchase at any one time is a 5% share.
If you decide to buy shares we will need to calculate what the Housing Authority's shares are worth for your home. We'll arrange for an independent property valuer to complete a valuation of your home so we can calculate this.
You don't have to buy more shares. We encourage you to buy more shares if it is suitable for you do so, but you are not obliged to buy any further shares. Your share and the Housing Authority share of your home has an impact if you wish to sell your home or refinance your loan.
As responsible lenders, we will provide support to you by considering any impacts this could have on you and your family. It's important to consider your financial situation before you purchase further shares, as you'll be increasing your loan amount with Keystart and, in turn, increasing your minimum monthly repayments.
We'll work with you to review your current income, any other debts you may have, your current expenses and the current value of your home. This will give you an indication as to whether or not purchasing further shares is suitable for you.
Even if a loan increase is not suitable for you at one time, this doesn't mean that you won't be able to do this in the future.
All the information you need on selling or refinancing your shared ownership home.
Keystart recommends that you seek your own independent financial advice prior to making any decisions about your financial needs. The examples given in this post are provided for illustrative purposes only.