With lockdowns and COVID-19 restrictions in place, Australians are already finding it difficult to save for a new house. However, these restrictions had practically no influence on the rising housing prices. If you are planning to buy a new property but struggling to save, then you might want to consider applying for the Victorian Homebuyers Fund (VHF).
The Victorian government had recently announced a new fund, the Victorian Homebuyers Fund (VHF). The state government introduced the VHF to lower the upfront cost of buying a property. This is due to the state government’s effort to chip in one-quarter of the deposits for eligible Victorian homebuyers. In fact, the Victorian government had pumped $500 million into the VHF, which is an extension from the current $50 million HomesVic Shared Equity Initiative.
In other words, if you are eligible, you only need a 5% deposit for your dream property, without paying the costly Lenders Mortgage Insurance (LMI).
Additionally, if you are an eligible Indigenous Australian, then the state government contributes up to 35%. This means, you only need a 3.5% deposit.
The silver lining here is that, you can also apply for other available grants in addition to this fund.
In this article, we will tell you the:
- Eligibility for VHF
- The application process for the VHF
Who can apply for the VHF?
All Victorian residents can apply for the VHF, either as an individual or a couple, as long as you are:
- 18 years old and above
- Australian citizen(s) or permanent resident(s) at the time of application
- Earning a gross annual income of less than $125,000 (or a combined gross annual income of less than $200,000)
- Intending to be the owner-occupiers of the property
- Not currently owning a property
- Able to demonstrate that you have enough deposit
This fund is not only for first homebuyers, but you cannot own a property at the time of application.
If you are still unsure about your eligibility, you can use this online tool as a guide.
The application process:
If you are eligible to apply for the VHF, then:
1. You should check the eligibility of the property.
You need to purchase a property less than $950,000 in Metropolitan Melbourne, Geelong or less than $600,000 in other eligible locations as stated here. Moreover, the property must be a house, townhouse or apartment.
The property must be vacant at the time of purchase, otherwise, the lease for the property must expire within 12 months of the purchase.
If you need advice on where to buy your dream house or what to look out for when purchasing a property, contact us today!
2. You should start gathering the necessary supporting documents.
Similar to applying for a home loan, you will need to prove that you are able to serve the mortgage payment. You also need to prove that you are able to save the 5% deposit.
Supporting documents can include:
- Proof of identification documents to prove your identity
- Recent payslip to prove your income sources, self-employed buyers can submit their individual tax return statement from the previous financial year
- Recent utility bills and credit card statements showing your regular expenses; if you are currently renting a property, you will need to provide your formal agreement
- A credit report or credit score to show your personal assets and liabilities
- Other documents: Property details of the property you intend to purchase, possible insurance coverage
3. Then, you should contact one of the participating lenders.
Alternatively, contact a mortgage broker to smoothen your loan application process.
4. Secure your property and enter a contract of sale within 6 months of receiving provisional approval for the VHF.
Once you receive your provisional approval from the bank, you will have 6 months to enter a contract of sale.
At this stage, you need to review the following documents carefully:
- A Participation Agreement
- A Scheme Mortgage
- The Scheme Mortgage Terms
- A Letter of Support
- You also need to watch a short clip explaining the VHF
Later, when you enter your contract, you must contact your bank who will approve your loan application subsequently.
Are you confused with the overwhelming number of finance and mortgage jargon here? Don’t worry, we are here to help you.
5. Setting down into your dream property.
The Victorian state government provides the VHF via the independent Electronic Lodgement Network Operator (ELNO) workspace unless stated otherwise. If you have engaged with a lawyer or a conveyancer, then they will assist you with this process.
At Benevolence Financial Group, we believe that securing your dream house shouldn’t be a burden. Hence, we are here to assist you as you make every little step towards your dream house. If you need help accessing the VHF, please reach out to one of our experienced mortgage brokers.
The information provided is general in nature and does not constitute financial advice. Please speak to us for recommendations on your individual circumstance and requirements.