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How Does Keystart Work? (And Is It Right For You)

Is Keystart your path to homeownership? Let’s take a look.

Building your first home is the BEST time (we’d know, we’ve built a few!). Finding that perfect plot of land just waiting for your name, designing a home so you it hurts, cancelling the direct debit to your landlord… It’s just a good time all round.

There’s just one small, teeny tiny, little thing to mark off first… finance. Aka, your loan, aka, talking to the bank. Less of a good time.

In fact, here’s where it can get plain scary. A hefty deposit? Pfft. Not in this economy. Lenders’ mortgage insurance? Come again??

The good news is that you don’t need a 20% deposit to get your own home. There’s a loan that negates the need. Meet Keystart, you’ve probably heard of them. Well, maybe. 

What is a Keystart home loan?

The WA Gov established Keystart to help more West Australians into home ownership. Basically, where traditional lenders (i.e., banks) are unable to offer a loan due to the lendee’s financial circumstances or lack of deposit, the Government is on hand to offer a more flexible finance option instead.

Keystart:

  • Only requires a 2% deposit, 1% of which must be genuine savings.
  • Does not need lender’s mortgage insurance.
  • Offers low entry costs.
  • Only requires those building to pay the full monthly repayment when the home is move-in ready.

How does Keystart work?

Keystart is a ‘transitional lender’. This means they offer a variable interest rate (as opposed to fixed) —the idea being that as soon as you’re able, you will transition your Keystart loan to a traditional lender with a fixed or lower interest rate.

If you go through Keystart, you’ll be issued five standard progress payments as your home is built. Normally at:

  1. Slab down (when the foundation of your mark is ready to go – Hello Slab Party!)
  2. Plate height (when the brickwork is done)
  3. Roof cover (when the roof is up, amongst other things)
  4. Lock up (when the doors, windows, etc., are in)
  5. Practical Completion (when the house is fit for occupation) 

Then, once your home is move-in ready, you start paying the monthly repayments in full. It’s from here that you’ll also be encouraged to refinance with a bank and transition the loan. Cool, huh?

How do I qualify?

To qualify, you must:

  • Be 18 or over.
  • Be an Australian citizen or permanent resident.
  • Earn less than $105k for singles or $155k per annum for families.
  • Be intending to live in the home yourself (Keystart is for owner-occupiers only, not investors).
  • Not own another home or block at the time of settlement.

The Debt Servicing Ratio (DSR) has been removed, so if you have a car loan, personal loan or credit card debt over 10% of your monthly income, you’re still eligible. Happy days.

Because the aim is to help as many West Australians as possible into home ownership, unlike the bank and other traditional lenders, you won’t be disqualified for defaulting on a previous loan or declaring bankruptcy either.

Could Keystart be right for you? Chat to a Vida.

It’s likely! With flexible deposit amounts, accommodating criteria, and reduced repayments. We can smell the fresh paint in your brand new house already.

Thanks to Keystart, a ‘No’ from the bank no longer means the end of your homeownership dreams. For that, we love it! Let’s be real, today’s property market looks a little different to the one your parents or grandparents bought in. There’s nothing wrong or even unusual with accepting a little extra support (thanks, gov).
But you’re unique, and so is your situation. To find out if Keystart could be the key to your home or house and land package, read more about the scheme here and give us a holler at the bottom of the page—our financial gurus come both cost and obligation free.

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