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These Victorian Homebuyer Fund case studies explain how your share and contributions are calculated when you start, if you take full ownership, sell, renovate, make extra payments, or your income changes.

How does shared equity work when I start out?

It’s easy. Find out how Elisa’s financial contributions and the State’s financial contributions give her shared equity in her home right from the start.

Elisa saves $25,000, the minimum required deposit of 5% for a $500,000 home. She completes the Homebuyer Fund eligibility tool to check her eligibility for the State to also contribute 25% to buy a $500,000 home, in one of the Homebuyer Fund’s eligible locations. Elisa applies to one of the State’s participating lenders (a bank) for a shared equity mortgage with the Homebuyer Fund. To assess her application, the bank works with the Homebuyer Fund, which agrees to contribute 25% toward Elisa’s home purchase. Elisa provides her bank with all the information it requires and agrees to all the terms and conditions required, before gaining official approval for a shared equity purchase.

Elisa then makes an offer to buy a home, which her bank and the Homebuyer Fund approve. The offer is accepted by the seller and Elisa moves into her new home. As she is starting out, Elisa has 5% equity in her home while the State has 25%. Her bank mortgage is $350,000, or 70% of the purchase price. She must start making mortgage repayments under the terms of her bank mortgage.

Can I refinance to pay out the State’s share in my property?

Yes! Find out how Chen refinanced her loan to pay out the State’s share of her home.

Chen buys a house valued at $460,000 with the help of the Victorian Homebuyer Fund. She pays a 5% deposit, which is $23,000 and the Homebuyer Fund contributes 25%, which is $115,000. To cover the remaining cost of $322,000, Chen takes out a home loan with one of the State’s participating financial partners. While Chen avoids paying interest and annual fees on the Homebuyer Fund’s 25%, the State’s share entitles it to any capital gains, based on the property’s value whenever Chen makes a payment.

Five years later the property’s value has increased to $560,000. Chen’s home loan balance is now $291,000. At this point, the State’s share has not changed, and is still 25%.

Chen decides she wants to pay out the State’s 25% share in her home, so she makes an appointment with her financial institution. She requests an additional $140,000, which represents 25% of $560,000 – the property’s total value. Chen gets approval for the $140,000 and uses it to pay out the State’s share of her house.

With the help of the Homebuyer Fund, Chen was able to buy her first home and then refinance to pay out the State’s share of her home.

Can I reduce the State’s share over time through extra payments?

Yes! Find out how Ahmed used accumulated savings to reduce the State’s share in his home.

Ahmed buys a house valued at $400,000 with the help of the Homebuyer Fund. Ahmed has a 5% deposit of $20,000 while the Homebuyer Fund contributes 25% which is $100,000.

After eight years Ahmed has $30,000 in savings and decides to reduce the State’s share in his home. In this example, his property is now valued by Valuer-General Victoria (VGV) at $547,000 which is $147,000 more than what he paid for it. When he makes a payment of $30,000 to the Homebuyer Fund, the State’s 25% share in his property is reduced by 5.48%* to 19.52% i.e. ($100,000/$400,000) – ($30,000/$547,000).

*Minimum repayment must reduce Government share by at least 5 percentage points and be at least $10,000.

What if my circumstances change and my income breaches the threshold?

Don’t worry. Find out how John and Cindy dealt with the changes to their financial circumstances.

John’s able to buy a home valued at $700,000 with the help of the Homebuyer Fund. He has a 5% deposit which is $35,000. John approaches one of the State’s participating financial partners and gets approved for a home loan of $490,000. with the Homebuyer Fund agreeing to contribute 25% of the purchase price, being $175,000.

Three years later, Cindy moves into his home as his spouse. Cindy chooses to become a registered owner of the property and therefore also becomes a participant with John in the Homebuyer Fund as a multiple person household. Their combined income exceeds the Homebuyer Funds’ combined income threshold of $200,000. The State advises John and Cindy that, due to their increased income, they will be given a two-year grace period to pay off the State’s share of their property.

John and Cindy set up a meeting with their financial institution and are advised to increase their loan repayments to pay off the State’s share within the two years. However, within those two years, John and Cindy’s combined income falls under the Homebuyer Fund’s income threshold. When they advise the Homebuyer Fund team, they are told they no longer need to pay out the State’s share of their property, and if they wish, they can ask their financial institution about re-arranging their loan repayments.

It’s important to note that as joint participants, if John and Cindy’s combined income was to exceed the combined threshold again at any time, they must advise the Homebuyer Fund team and ask their financial institution about refinancing their loan or exiting the scheme.

What happens if I want to sell my home?

You can! Find out how Sandeep and Susan sold their home and paid back the State’s share.

Sandeep and Susan buy a property valued at $700,000. They contribute a 5% deposit which is $35,000 while the Homebuyer Fund makes a 25% contribution which is $175,000.

After a few years, Sandeep and Susan decide to sell their home. They sell it for $890,000. The $190,000 increase in their home’s value means the State shares 25% of the capital gains, equalling $47,500. The Homebuyer Fund’s 25% share is now worth $222,500, which Sandeep and Susan have to pay back from the proceeds of their sale, after any outstanding loan to a participating lender is repaid.

If I renovate, will the State receive any of the benefit when I sell?

Find out how Yarran’s renovations affected his repayments.

Thanks to the Homebuyer Fund, Yarran was able to buy a home worth $700,000. He contributes a 5% deposit which is $35,000 and the Homebuyer Fund contributes 25% which is $175,000. After moving in, Yarran decides he wants to renovate, which he obtains approval to do.

A few years later, Yarran agrees to sells his home for $900,000. The Valuer-General Victoria (VGV) assessed the renovations to have added $20,000* to the value of his home. Given Yarran’s renovations are valued at $20,000 at the time of sale, this amount is deducted from the total sale price when calculating the amount payable to the State. As a result, Yarran repays $220,000 to the State from the proceeds of his sale calculated as follows: $900,000 (sale price) less $20,000 (value of renovations) x 25% (proportional share the State had in the home). *Improvements valued at the time of sale.

Last modified: 8 October 2021
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