Innovative shared equity partnership to help more Victorians own a home
Through an innovative partnership, Great Southern Bank will provide $2 million in long-term financing to not-for-profit housing provider National Affordable Housing (NAH), supporting eligible Victorian households to buy a home without needing to save for a deposit.
NAH will utilise the Great Southern Bank financing as equity to support up to 15 low-to-moderate income individuals, couples and families to buy their own home through the BuyAssist shared equity program.
The innovative debt-to-equity financing agreement is the first time an Australian bank has addressed barriers to saving a home deposit by:
- Providing debt finance to a not-for-profit which they can convert into the equity component of the home purchase, removing the need for the buyer to save a deposit, and
- Simultaneously supporting homebuyers through providing a home loan
Great Southern Bank CEO and Managing Director Paul Lewis said the agreement was a logical step for the customer-owned bank, helping to provide more affordable pathways to home ownership and aligning to the bank’s purpose.
“We’re committed to helping all Australians to own their own home. Partnering with other community-based organisations and government on innovative ways to help more Australians to purchase a home is key, particularly where it may otherwise have been out of reach,” Mr Lewis said.
“The pathway to home ownership for many Australians can be challenging, with cost of living pressures making it harder than ever before. Shared equity initiatives like BuyAssist are an important part of the solution for rental tenants who thought they’d never be able to save a large enough deposit to buy a home of their own.
“This agreement extends on our existing six-year partnership with NAH. For the first time we are going beyond home loans to also provide finance directly to NAH that supports more Australians to buy a home sooner.”
NAH and BuyAssist Managing Director Mike Myers noted:
“Rates of home ownership in Australia are declining, particularly for households that are at an age at which they would have traditionally purchased their own home.
“The time it takes to save a sufficient deposit is a key hurdle that the BuyAssist shared equity program addresses. The platform enables investment from different sources to support households to buy their own home. Accessing finance from our long-term and established partner Great Southern Bank will enable us to leverage our investment and support even more households own their own home.”
Under the BuyAssist program, eligible lower-to-moderate income singles, couples or families can purchase a home without needing to save a 20 per cent deposit. On average, NAH provides 25 per cent of the property purchase price as an equity contribution, with the homebuyer then only needing to borrow the remaining 75 per cent. The equity contribution reduces the time it takes to save to buy a home, and helps homebuyers to avoid costly Lenders Mortgage Insurance (LMI). When the house is sold in the future or the household refinances, NAH is entitled to an agreed percentage of the proceeds.
NAH works with developers to source appropriate newly constructed homes, which are then made available to the BuyAssist homebuyers. The program is currently focused on providing homes across metropolitan and regional locations in Victoria.
“We need more affordable housing pathways for households to secure a place they can call home,” Mr Myers said.
“Shared equity is a significant part of the housing spectrum in the UK and is expected to become a more common way for people to achieve home ownership in Australia.
“NAH is driven to continue to find innovative ways to achieve its mission to assist more low-to-moderate income households with pathways into affordable housing solutions.”
The NAH BuyAssist program commenced in Victoria with a pilot in 2018, generously supported by a grant from the Victorian Government. The Victorian Government is supporting NAH to utilise part of the repaid equity from the original program to support the arrangement with Great Southern Bank.
The injection of financing from Great Southern will enable the program to scale more quickly, helping more people into homes sooner.
“I’m pleased that this initiative will go some way to making home ownership more attainable in Victoria, including for key workers who want to be able to buy a home near where they work,” Mr Lewis said.
About Great Southern Bank
For over 75 years, we’ve been putting our customers first, and today we look after the financial needs of more than 387,000 Australians. We have changed our name from CUA to Great Southern Bank but we remain customer-owned and firmly focused on helping all Australians own their own homes. For information visit gsb.com.au
National Affordable Housing is a social value enterprise established in 2008 through the increasing need for more affordable housing options in Australia. Since 2009 we have delivered almost 4,000 new affordable rental homes across three states and since 2017, we have been delivering affordable home ownership. National Affordable Housing is part of the National Affordable Housing Consortium Group (NAHC). For more information visit nahc.org.au
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BuyAssist and Great Southern Bank innovative shared equity partnership looks forward to helping more Victorians own a home