Login
ISCOVER
The state-government-backed lender has dropped the minimum deposit requirement for its Graduate Loan to enable more borrowers to buy their home sooner.
HomeStart Finance, a non-bank lender backed by the South Australian state government, has lowered the deposit hurdle for its Graduate Loan.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
For the first time, HomeStart is offering a 2 per cent deposit home loan (down from 3 per cent).
The Graduate Loan, which previously enabled South Australian graduates to buy their own home with a deposit of as little as 3 per cent, does not require borrowers to pay lenders mortgage insurance (LMI).
Instead, it enables South Australian residents with a certificate III, IV, diploma, bachelor degree or higher qualification to purchase an owner-occupier property in metro and selected regional areas, with a deposit of 2 per cent.
The lender said it hopes the move could “wipe months off savings plans” by wiping thousands of dollars of the deposit required.
HomeStart chief executive Andrew Mills said the lower deposit hurdle could be “life changing”.
“Many South Australians are struggling to save enough to pay for the ever-growing deposit on a home, particularly from traditional lenders, and rising house prices keep putting home ownership beyond their reach,” he said.
“The 2 per cent Graduate deposit loan is another way in which HomeStart continues to adapt and innovate to address housing affordability concern and help more South Australians into their own home sooner.”
HomeStart currently has more than 2,000 Graduate Loans on its books.
According to the lender, 619 of these were settled in the past financial year, of which 84 per cent were first home buyers, 63 per cent were couples and 42 per cent were for the construction of a new home.
SA housing package
HomeStart has been growing and expanding its products recently, after the South Australian government launched its Housing Construction Stimulus Package to keep boosting residential building post-HomeBuilder.
The stimulus package includes $48 million in new initiatives, targeting the local construction industry and trades such as plumbers, electricians, carpenters and bricklayers, as the “heat of HomeBuilder” eases in the second half of the year.
The stimulus is expected to result in 960 new dwellings over the next five years.
It includes:
- An expansion of HomeStart’s shared equity product, an interest-free secondary loan, taken out with a primary HomeStart loan, which allows home buyers to borrow up to 25 per pent of the purchase price of a property (up to a maximum of $200,000). The product from the state-backed non-bank lender will now apply to new home construction, aided by $21 million from the stimulus package.
- The state government will allocate $20 million towards underwriting a mix of apartments within developments in the Adelaide CBD and inner suburbs.
- The HomeStart Starter Loan scheme, an interest-free secondary loan that grants home buyers up to $10,000 to help cover the upfront costs of buying or building property for up to five years, has been expanded with 1,000 more loans available. Half of the additional loans will be limited to new home construction.
- At least $10 million has been designated to backing a build-to-rent proposal, in partnership with a community housing provider to deliver up to 180 social, affordable and market rental properties in Eastwood, an inner-southern suburb of Adelaide. The $10 million allocation includes a $9 million land contribution from the SA Housing Authority.
Previously, around $4 million had been committed for a stimulus package in the 2020–21 state budget.
[Related: SA unveils housing construction stimulus]
JOIN THE DISCUSSION