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Keystart home loans

Keystart header image showing a first home buyer receiving their keys

Building a new home is undoubtedly an exciting milestone, especially for first homeowners, but it can also be daunting and overwhelming. This is particularly true when it comes to financing, including saving for a down payment, securing a mortgage, and considering other potential sources of funding. If you are still struggling to make your homeownership dreams a reality, Keystart home loans offer exclusive, WA-only low deposit home loans that will save you from paying the expensive lender’s mortgage insurance (LMI). Read on to learn more about them and their eligibility criteria. 

  1. What is Keystart?

Keystart is a low deposit home loan solution funded by the WA State Government that allows you to buy first home sooner with only a 2% deposit and no Lenders Mortgage Insurance (LMI) required.

Since 1989, Keystart home loans have been helping many first and low-income homebuyers get a foot on the property ladder. The initiative has helped more than 118,000 West Australians and families since its inception – and you could be the next one! 

You can apply for a Keystart home loan if you are still struggling to save on a large deposit or are unqualified for a traditional mortgage. Even if it is not your first time buying or building, as long as it will be your primary residence and you do not currently own a property, this initiative could be the key for you to get into a place you can call home.

What is Keystart header image

  1. Benefits of Keystart home loans

Keystart is not affiliated with a specific bank and has access to over 40 lenders instead. That means you can choose from a diverse range of loan products with excellent rates, which you cannot find in big banks and mainstream lenders. With the right financing, your dream of owning a new home is within reach. But why Keystart, you ask?

Main benefits of Keystart home loans:

  • Only 2% deposit required
  • No LMI required
  • Flexible eligibility criteria
  • Shared equity options
  • Regional area support
  1. Keystart income limits & price caps

Before applying for a Keystart loan, make sure you know the loan’s income limits and price caps, which differ for each region. These figures change from time to time, so check for the latest update to certify whether the loan matches your requirements.

Property price caps and income limits
Region Income limits Property purchase price cap

Metropolitan area

$105,000 (singles)

$155,000 (couples)

$155,000 (families)

$560,000

Regional areas (excluding Kimberley & Pilbara)

$125,000 (singles)

$155,000 (couples)

$155,000 (families)

$560,000

Kimberley

$135,000 (singles)

$165,000 (couples)

$170,000 (families)

$650,000

Pilbara

$165,000 (singles)

$195,000 (couples)

$200,000 (families)

$750,000

  1. Check your Keystart eligibility

Just like any loan product and lender, there are some requirements that you have to satisfy to be deemed qualified, such as your income and the purchase price of the property.

If you are applying with your spouse or partner, you can increase your borrowing power if both of you have an income.

For families, the number of dependent children will be among the factors used in determining basic household expenses.

Consider your regular and additional expenses, whether single, a couple, or with family members, to ensure you can afford the loan.

Basic requirements:

  • You’re over 18 years of age
  • You don’t already own a home or land
  • You’re looking to live in the home
  • You’re an Australian citizen or permanent resident
  • You live in WA and want to build or buy a home in the state
  • You have enough funds available to cover all costs associated with buying a house, including your deposit, moving costs, and any fees.
  1. What types of Keystart loans are available?

  • Low deposit home loans

This type of home loan makes it easier and more affordable to own a home. With a low-deposit home loan, you only need to deposit as little as 2% of the property purchase price, drastically reducing your upfront costs. If qualified, you can use your First Home Owner Grant (FHOG) to cover your deposit if you build a new home. Plus, you do not have to pay the lender’s mortgage insurance.

  • Access home loans

This home loan offer is specially designed for people with a permanent disability. You may also be qualified if you care for a dependent with a permanent disability and therefore have specific housing requirements. Access home loan deposits start at 2%, and you can also use your FHOG towards the deposit (applicable to new home construction only). As usual, you will not be charged with lender’s mortgage insurance. Applicants should be aware that the Housing Authority will co-own a share of the property, which is beneficial in lowering the total loan amount.

  • Aboriginal home loans

For First Nations and Torres Strait Islander peoples, especially those who cannot access mainstream lenders, consider looking into the Aboriginal Home Ownership Scheme. Applicants will work with a dedicated team and have the option to choose between a full ownership or shared ownership loan. If the latter is selected, you give the Housing Authority the right to co-own a share of the property. In return, the loan will become more affordable for you.

  1. Keystart home loans questions

Keystart is an initiative that aims to assist people financially so that they can buy or build their homes and was established in 1989 by the West Australian State Government.

The Keystart variable interest rate is 7.60% as of July 1st, 2023. 

No. Keystart aims to help as many West Australians as possible by making our loan products as affordable as possible. That includes lowering the deposit requirements and removing the need for LMI to help you get into your home sooner. 

Technically, Keystart is affiliated with the Western Australian government as it introduced this specific initiative. Keystart is a company owned by the Housing Authority and is overseen by an independent board of directors under the regulation of the Australian Securities and Investments Commission.

Shared ownership is a type of Keystart loan that allows you to buy a share in a property you co-own with the Housing Authority. It is easier on the budget, especially for those not yet capable of purchasing the property outright. With a shared ownership loan, you have lower monthly repayments.

You can increase your ownership share depending on a few factors. First, the property must be valued by an independent assessor. As for the share of the Housing Authority, it will be based on the current market value of the property in question. Choose a “flexible” property so that you can increase your ownership at any time. Meanwhile, if you pick a “fixed” property, the Housing Authority will always own its share. You can, however, choose to sell your share back to the Housing Authority, and the equity can be used to buy another property.

You can sell your home anytime you wish to do so. However, a valuation will commence before you can sell it, which will tell you the minimum sale price and its current market value. After that, you will receive an offer from the Housing Authority unless it forgoes this step. If so, you can sell your home on the open market.

In certain circumstances, refinancing is beneficial. However, it may not apply to you if there is no change in the interest rates. The common goal of refinancing a loan is to save on the monthly repayments and over the long term. Be sure to consider the potential savings, along with the loan term, your other loans or debts, and your future plans before lodging a refinance loan application. 

Click here to learn more about Keystart refinancing. 

Yes, you can move to another lender. However, you must read your loan agreement and current financial situation before contacting a new lender. One of the most significant requirements is ensuring you have enough home equity to make the switch. You can talk to the new lender about the equity; they will typically do their own valuation. You are always free to find the easiest and most suitable option for your situation. Don’t be afraid to shop around and ask plenty of questions before going the refinance route. 

Learn all about the Keystart refinance process on our page.

You need to consider your preferences and financial situation before moving to another lender. The refinancing process is beneficial for certain circumstances, perhaps including your own. Keystart does not require you to stay, as you always have the option to switch to another lender. In some cases, borrowers find another lender that meets their requirements, particularly as soon as they build some equity in their home.

The interest rate is based on the standard variable interest of the Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB), Westpac Banking Corporation, and the Commonwealth Bank of Australia (CBA). It may be true that some lenders offer lower interest rates than Keystart, but that is due to the design of the program. The priority is to offer lower upfront costs and help avoid the LMI, which will help you save thousands of dollars over the life of the loan. Taking all that into consideration, Keystart still has some of the best interest rates and may even be lower than the standard variable rate of many mainstream lenders.

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