A shared equity scheme combines your deposit and mortgage with a partner’s contribution towards the purchase price. You live in the home while the partner holds a share of its value. The smaller mortgage can reduce repayments, but buying out the partner can cost more after property prices rise.
How Shared Equity Differs From a Guarantee
Shared equity gives the partner a financial interest in the home. The partner’s return depends on the agreement and the property’s later value.
- A deposit guarantee supports a low-deposit mortgage without giving the government an equity share. You still repay the full loan you borrow.
- A family guarantee uses a relative’s property or other agreed security to support your borrowing. The guarantor risks their security if you cannot repay.
- Rent-to-own starts with a rental arrangement and an agreement about a later purchase. It does not automatically create the same ownership rights as buying through shared equity.
If a parent can provide security, compare a family equity home loan with giving an equity partner a share of future value.
Types of Shared Equity Home Loans
Shared equity schemes include government programmes and arrangements funded by non-profit providers or investment funds. Their contribution and repayment rules determine what you give up in exchange for a smaller mortgage.
Government-Assisted Schemes
Help to Buy is open through participating lenders. The Australian Government contributes up to 40% for a new home or 30% for an existing home. It shares proportionally in gains or losses when you sell or buy back its share.
Housing Australia’s participating-lender list includes Bank Australia and Commonwealth Bank, plus several other lenders. Our guide to the Help to Buy scheme covers its eligibility checks, property price caps and application steps.
Urban Connect Government Co-Ownership
Urban Connect Shared Equity is a Western Australian Government arrangement through Keystart. The Housing Authority co-owns the property, with a contribution up to 35%, capped at $250,000.
Apply through Keystart for an eligible new or off-the-plan home. Keystart determines the ownership percentage from your circumstances. Its Urban Connect shared equity guide describes the eligible homes and application route.
A private investment fund uses its own agreement, which can set a different return formula and exit process. Urban Connect’s government co-ownership terms do not establish a private fund’s buyback or sale obligations.
Non-Profit and Investment Fund Schemes
A non-profit housing provider or investment fund can contribute money under its own equity agreement. That agreement sets the eligible properties, the partner’s return and your route to buying more equity. A percentage share can rise or fall with property value. An investment fund’s return formula can differ from a government scheme’s proportional share.
How Shared Equity Home Loans Work
You make regular repayments on the lender-funded share and meet the property’s ongoing costs. An equity contribution has separate repayment rules, so the bank balance alone does not show everything needed to reach full ownership.
- The lender assesses your deposit and ability to repay. The scheme assesses its own eligibility tests and the proposed property.
- At settlement, your deposit, mortgage and the partner’s contribution fund the purchase.
- Where the agreement allows it, you buy more of the partner’s share over time. A valuation determines how much equity your payment buys.
- A sale, refinance or specified change in circumstances can trigger repayment. Income reviews can also require a contribution when your capacity improves.
Read the equity agreement alongside the mortgage documents. A solicitor or conveyancer can explain ownership rights, permission requirements and the repayment triggers before you sign.
State Shared Equity Schemes
State schemes have their own eligibility tests and ownership structures. Approval for one programme does not establish eligibility for another.
A state or territory programme can lower the purchase price instead of adding an equity partner. The ACT’s Affordable Home Purchase Scheme sells homes at affordable prices to eligible low and moderate income households, who are drawn by ballot. Buyers sign a standard purchase contract and arrange their own finance, because the scheme provides no loan. Most must live in the home for 12 months after settlement.
Keystart Shared Ownership Loans
In Western Australia, Keystart’s shared ownership loans combine a mortgage with Housing Authority co-ownership. You pay the property’s ongoing costs. Keystart’s products include options for public housing tenants and sole parents in specified circumstances.
Keystart distinguishes flexible and fixed shared ownership. A flexible arrangement allows you to increase your share. With fixed shared ownership, the Housing Authority retains its share and buys yours back when you sell. Keystart’s refinancing guide says fixed shared ownership cannot be refinanced. A flexible loan refinance must cover the mortgage balance and the current value of the Authority’s share.
Keystart accepts applications for shared ownership products, including Urban Connect, subject to its product rules. Under flexible ownership, each additional purchase buys at least a 5% share, priced using an independent valuation.
For Urban Connect, the government has the first right to buy your share when you sell. If it declines, you can sell on the open market.
Keystart’s shared ownership selling guide requires a valuation and consent before an open-market sale. The Housing Authority’s payout uses the higher of the sale price or valuation, with the quote showing improvement or maintenance adjustments. Sale proceeds must also cover the mortgage and selling costs before you receive any surplus.
See our Keystart home loan guide for its Western Australian loan options.
HomeStart Shared Equity Options
HomeStart’s South Australian Shared Equity Option is an additional loan with no regular repayments or interest charges. It can fund up to 25% of the lower purchase price or valuation, subject to product limits. You remain the registered owner.
HomeStart applies its own household-income and property rules, including location restrictions. Its Shared Equity Option terms require repayment on refinance, an ownership change or when the home stops being your principal residence. It shares losses on sale under its formula, but only gains on refinance. These terms differ from Help to Buy.
New applicants can request the Shared Equity Option with a HomeStart home loan. HomeStart uses net household income and retained-savings tests, while Help to Buy uses taxable income and its own eligibility rules.
NSW Shared Equity Home Buyer Helper
The NSW pilot has closed to new applications. New buyers can consider federal Help to Buy instead, subject to its separate eligibility assessment.
Existing NSW participants keep their agreements. Revenue NSW’s Shared Equity Home Buyer Helper guidance requires ongoing owner-occupation, insurance and eligibility reviews. Changed circumstances can trigger a buyback requirement. Voluntary payments must reduce the government’s share by at least five percentage points, with an assessed valuation. Sale or refinance can repay the remaining share.
Victorian Homebuyer Fund
The Victorian Homebuyer Fund is closed to new participants. Its former contribution limits describe existing agreements, not an available application offer. Federal Help to Buy is a separate route for eligible Victorian buyers.
Existing participants must still complete annual reviews and maintain insurance. The fund’s ongoing obligations include approval requirements for renovations, refinancing and certain early exits. Income or windfall triggers can require equity repayment, subject to the stated conditions and lender approval. On sale, the mortgage and fund share are paid before any remaining amount reaches the homeowner.
Queensland Boost to Buy and Help to Buy
Queensland’s state shared equity scheme is Boost to Buy. Regional Queensland applications remain open through Unity Bank, while South East Queensland allocations are exhausted. The state contributes up to 30% for a new home or 25% for an existing home.
Boost to Buy requires first-home-buyer eligibility and a minimum 2% deposit. Queensland’s eligibility rules exclude receiving assistance from another government shared equity scheme or home-buyer guarantee. Federal Help to Buy is also open to eligible Queensland buyers through participating lenders. Its 40% and 30% contribution limits belong to that federal scheme, not Boost to Buy.
Boost to Buy participants must remain owner-occupiers in the scheme for at least two years. Voluntary buybacks normally reduce the government’s share by at least five percentage points, using a current valuation. Full repayment or reducing its share below 5% is restricted during the first two years.
Queensland Treasury’s Boost to Buy repayment and sale rules base the government’s share on property value. A sale below valuation can leave a shortfall. Sale proceeds pay the lender, government and other legal claims before you receive the remainder. Moving out triggers full repayment, and income reviews can require a buyback when borrowing capacity permits.
Tasmania MyHome
Tasmania’s MyHome shared equity programme accepts applications through Bank of us. Homes Tasmania contributes up to 40%, capped at $300,000, for new homes or house-and-land packages. Existing-home assistance is up to 30%, capped at $150,000.
MyHome has a minimum 2% deposit and its own income, asset and property tests. Homes Tasmania tenants have exemptions from income and asset limits. Participants must pay out Homes Tasmania’s share before 30 years by buying it back or selling. The payout tracks the property’s market value, so the original contribution is not a fixed exit price.
Shared Appreciation Mortgages
A shared appreciation mortgage exchanges a lower interest cost or reduced upfront funding requirement for a share of future capital growth. The appreciation payment can keep rising with the property’s value unless the contract caps it. True shared appreciation mortgages are rare in Australia, so distinguish an actual offer from a general description of the structure.
The growth percentage need not match the percentage initially advanced. Improvement-driven value can also count. HomeStart, for example, keeps its percentage unchanged after improvements under its Shared Equity Option terms.
Exit usually requires a valuation and the funder’s sign-off on the payout and discharge. The agreement determines the valuation method, any dispute process and which events require repayment. A low starting payment can therefore lead to a large amount due when you sell or refinance.
Compare Costs Over the Holding Period
Compare interest, fees and the appreciation payment across the whole period you expect to own the home. A hypothetical example shows why the starting repayment alone can mislead.
Assume a $600,000 purchase with a $60,000 deposit and a ten-year holding period. A standard loan funds $540,000. The alternative uses a $440,000 mortgage plus a $100,000 interest-free advance, repayable with 30% of capital growth.
Both mortgages have a 30-year term and a constant 6% annual interest rate, with monthly principal-and-interest repayments. Neither has fees in this example. The alternative’s advance has no regular repayments or cap on the growth payment.
| Growth Scenario | Value After Ten Years | 30% Growth Payment | Alternative Finance Cost | Standard Loan Finance Cost |
|---|---|---|---|---|
| Flat | $600,000 | $0 | $244,780 | $300,412 |
| Moderate | $800,000 | $60,000 | $304,780 | $300,412 |
| Strong | $1,200,000 | $180,000 | $424,780 | $300,412 |
Finance cost here means mortgage interest paid over ten years plus the appreciation payment, rounded to dollars. Principal repayments and the returned $100,000 advance repay borrowed money, so they are excluded from this cost measure. Both arrangements still require their outstanding debts to be repaid at exit.
The alternative saves about $55,632 in mortgage interest. A growth payment above that saving makes it dearer in this example. Actual rates, fees and contract formulas change the result, and the scenarios are illustrations rather than property forecasts.
Shared Equity Loan Eligibility and Trade-Offs
Shared equity requires both scheme eligibility and enough income to service the mortgage. Tests can cover residency or citizenship, existing property ownership and owner-occupation. Income limits and price caps depend on the programme.
A smaller loan provides a measurable starting benefit. For a hypothetical $600,000 home, a $30,000 deposit and a $180,000 equity contribution leave a $390,000 mortgage. Using the same deposit without that contribution requires $570,000, assuming a lender approves it. At the same interest rate and term, the smaller mortgage has lower repayments.
The contribution is still repayable under the agreement. If a 30% partner share tracks the home’s full value, it grows from $180,000 to $240,000 when the property rises to $800,000. Paying down your mortgage does not automatically reduce that partner share.
Renovation approval rules can restrict changes, and leasing can require permission or full repayment of the contribution. A refinance can require an equity buy-out, while staying in a scheme can limit the available lenders. These restrictions can affect a job move or plans to rent out the home.
Long-Term Planning and Scheme Changes
Build a long-term budget that includes the mortgage and the full cost of rates, insurance and maintenance. Add strata levies where relevant, plus valuation and legal costs for later equity purchases.
Give the buy-out plan an amount and a funding source. Decide how much you can save towards additional equity and whether future borrowing would remain affordable after higher rates. Model a rising property value as well as a flat one, because a larger buy-out can offset some of the benefit of a smaller starting loan.
Scheme caps and lender panels change. Use the scheme’s application terms to confirm the contribution available for your property, then have the repayment and exit obligations explained before committing to the purchase.
