_{0.00 – MERRY CHRISTMAS TO OUR LISTENERS!}

_{1.48 – Cate opens the episode…. Luke’s listener question is about homebuyer schemes involving shared equity.}

_{5.40 – Dave explains how the government’s stake works}

_{12.07 – The government’s *rules*}

_{19.45 – Sneak peak into next week’s ep: The five critical mistakes that buyers make.}

_{23.25 – Is a Lender’s Mortgage Insurance premium something that a shared equity purchaser should consider?}

_{41.15 – Gold Nuggets}

A lovely listener writes in to us with some questions about the Victorian shared equity scheme. Shared equity opportunities aren’t restricted to just Victoria though. This ep is relevant to any Australians who are considering a shared equity option with the government.

How should Luke approach this? Should he pay it down with savings (or debt), sell and upgrade, or convert the home to an investment in time?

Some background on our listener:

Luke is 30 years old, high school teacher, on $120k annual salary, 1 baby, 2 dogs, 0 cats.  (We like that dog to cat to child ratio!)

His partner will return back to work in about 6 months on approximately 70k but this timeframe is up in the air to some degree subject to how life with the baby and parenting goes, but when she does go back, this will take their total income up to $190k.  

Luke bought his home in the Northern suburbs of Melbourne for $670k in 2021 with the Victorian Homebuyer Fund’s help, contributing 5% of the purchase price himself and with the Gov’t Fund covering another 25%.

The home’s value has since increased to around $720,000 to $740,000, maybe more.

Dave talks our listeners through the government’s stake, and how the rules determine the equity split as the property appreciates.

Luke can repay the government in various ways, but which way is the optimal? Tune in to find out.

Luke needs to be aware of the calculations that govern the methodology for government payout. Mike lists some of the rules that the government have determined for equity buy-back. From bulk payment minimums to valuation steps, the rules are reasonably structured.

Should Luke reduce the government’s share gradually, versus saving up to repay the government later? Every situation is unique, but Dave shares some ideas for our listener to consider. One is a bit outside of the square, but it’s a great discussion point.

The Trio canvas the pro’s, cons and realities of shared equity.

Is a Lender’s Mortgage Insurance premium something that a shared equity purchaser should consider? As Mike eludes to, it’s really a question of timing, planning and goals.

Cate challenges Mike…. those who consider shared equity schemes with the government need the help, and she points out the merits of such schemes.

Luke has a few options to consider, but a few restrictions to bear in mind also. The Trio wish him the very best of luck with his property journey.

.…. and our gold nuggets!

Mike Mortlock’s gold nugget: Mike highlights the upside for those who have limited deposits.

Dave Johnston’s gold nugget: Aim to maximise your ownership as soon as possible! Full equity ownership is one benefit, but the options to renovate, improve, extend, invest are exciting too.

Cate Bakos’s gold nugget: For those who can enter with a small deposit under the First Home Guarantee Scheme or Home Guarantee scheme…. they could also consider these options too.

Resources:

If you enjoyed this episode, you may like to go back to enjoy these eps!

5: The lifestyle vs Investment conundrum

13: How age and stage of life can impact your property plan and selection

22: Why the family home is often the biggest piece of the investment puzzle

24: How mortgage strategy shapes your ability to hold property and how it can pay off for decades to come

204: Ownership structures Part 2: Parental support, shared equity schemes and co-ops

Upcoming episode – #290: Five Ways Property Buyers Fail to ‘Property’ Plan