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What is shared equity?

A guide to help you understand the basics of shared equity.

Contents

What is shared equity?

Shared equity can cover the gap between what you can afford and the cost of a property. With shared equity you may only need to make repayments on part of the loan, with the remainder being held by a lender (which could be a bank, financial institution, or the government).

HomeStart

Everyone deserves the chance to own their home and for 35 years HomeStart have been helping South Australians achieve this dream. They understand that everyone’s circumstances are different which is why they have a range of innovative, low deposit loans and additional options like the Shared Equity Option that cater to the diverse needs of our community. So, whether you're starting out on your home ownership journey or starting over, HomeStart could help you make it a reality. 

Learn more about HomeStart's Shared Equity Option here.  

Indigenous Business Australia  

Indigenous Business Australia (IBA) offers a shared equity to support Aboriginal and Torres Strait Islander people achieve their home ownership goals. The shared equity option is offered in combination with an IBA home loan, covering up to 35% of the property purchase price.

Read more about the IBA’s shared equity option here.  

 

How does shared equity make buying a home more affordable?

Shared equity has a significant impact on affordability because homebuyers only needed to afford repayments on the portion of a home’s purchase price not covered by shared equity, typically 75 per cent (but it can be a higher or lower percentage). 

Rising rents, interest rates and house prices, coupled with growing cost of living pressures, mean that more South Australians are stuck in a cycle of paying much higher rents, while not being able to move into home ownership. 

The wider benefit of getting more South Australians into home ownership through schemes like shared equity can pull more South Australians out of renting and into their own home, freeing up more rental properties which are in high demand. 

Shared equity is unlocking home ownership for many renters, often without paying any more in loan repayments than they were paying in rent. 

 

How does it work?

HomeStart is backed by the South Australian Government and offer the Shared Equity Option to help people into the housing market.

With this additional loan, HomeStart can lend you between 5% and 25% of the property purchase price as an interest and repayment-free loan. It increases your options without increasing your repayments.

You’ll repay this loan when you sell your property, refinance with another lender or voluntarily pay out the Shared Equity Option. Until then, you’ll continue making the repayments set for your home loan. 

 

Shared equity schemes available

Most states in Australia have shared equity programs available. 

In South Australia, the HomeSeeker SA website managed by the Department for Housing and Urban Development has a range of properties available for purchase with shared equity through HomeStart: