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If there are any sure things in life,it’s the sun rising in the morning,setting in the evening,and Australian property prices going up. At last count,home values grew by 8.1 per cent over 2023 despite five interest rate hikes. It’s no surprise researchers recently deemed Australian properties to be overvalued by about 30 per cent.

Regardless,owning a home is still the goal for many as prices for rentals also rise rapidly,prompting governments around the country to introducesome housing affordability policies over the past few years.

Shared equity schemes shouldn’t be blindly used by all.Aresna Villanueva

Primarily these have involved shared equity schemes,such as Victoria’s Homebuyer Fund and the federal government’s soon to be introduced Help to Buy scheme. These allow prospective homeowners to purchase a home with a deposit of as little as 2 per cent,rather than the usual 20 per cent required by lenders. The First Home Guarantee,which the federal government has run since 2022,is not strictly a shared equity scheme,but it also helps buyers with smaller deposits.

So far,these schemes have proved popular – one third of first home buyers in the year to June 2023 were helped by the federal government’s scheme. Victoria’s fund also experienced an unexpectedly high level of demand.

What’s the problem?

There’s a lot more to wrap your head around when opting for a shared equity scheme compared to a standard home loan. There are also restrictions on who can access the schemes and what sort of properties you’re able to buy. Some also impose a raft of conditions you must comply with while you own the property.

What you can do about it

If you’re thinking about applying for one of these schemes,here are some things to keep in mind:

Buy now,pay later services can seem like a good deal on the surface,but can be problematic if used improperly.

Opinion

BNPL

Just Afterpay it? If you buy now,you might pay later

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.