SA Government extends $10,000 interest-free housing loan scheme

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on January 31, 2022 Fact Checked
SA Government extends $10,000 interest-free housing loan scheme

The 'Starter Loan' scheme provides an interest-free loan of up to $10,000 to help cover borrowers' upfront costs when buying a home.

A further $10 million has been allocated to the Starter Loan in the 2021-22 Mid-Year Budget Review, which could see more people access the scheme.

Borrowers must also qualify for the primary 'HomeStart Loan' scheme, which provides finance to borrowers with as little as 5% deposit, or 8% deposit for builds.

The Starter Loan is also 'repayment free', meaning there are no repayments required for the first five years.

After that time if the loan is not paid in full, it could be reviewed and may be transferred to the primary HomeStart Loan balance.

Recipients can repay their interest-free loan over five years if they meet eligibility requirements, such as having a net household income of less than $65,000 or $90,000 for couples.

Since the scheme's launch in late 2019, 705 Starter Loans have been approved:

  • 2021-22 financial year: 217 (this year to date)
  • 2020-21 financial year: 378
  • 2019-20 financial year: 110

The total value of Starter Loans has reached $6.4 million since launch, and the value of homes built or purchased under the scheme is $201 million.

Of those who were approved for a loan, 70% were living in private rentals and a small number were Housing SA tenants.

Minister for Human Services Michelle Lensink urged eligible South Australians that are looking to purchase their own home to consider a Starter Loan.

"During the COVID-19 pandemic, the statistics clearly show take up of the Starter Loan has surged, which could be in part because we broadened the eligibility criteria to include moderate-income earners," Ms Lensink said.

She said that in addition to the Starter Loan initiative, the state government is delivering 1,000 new affordable homes across the state, being sold at price points no more than $422,050.

This is 'well below' Adelaide's median house price of over $731,000 according to Domain's latest report.

"Many of these homes are available through shared equity and I urge South Australians looking for housing to jump on our new HomeSeeker SA website for more information about how to save and budget for a home and for exclusive affordable home sales," Ms Lensink said.

This is in addition to the state's $15,000 First Home-Owner Grant accessed when borrowers build a new home.

Both of these schemes mean that South Australian home owners could access up to $25,000 to build a brand new home.


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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 26, 2022. View disclaimer.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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