WA to offer loans for off-the-plan deposits

Initially introduced as a mortgage pilot product that helped eligible Western Australians to buy new, established and off-the-plan two-bedroom-plus apartments, successful applicants could get access to loans with deposits as low as 2 per cent, and without having to pay Lender’s Mortgage Insurance.

Last year, the government extended the pilot and tinkered with the program to include one-bedroom apartments.

Now, the Urban Connect Plus will offer loans for developers’ deposits for off-the-plan apartments, with approved applicants to make payments towards the loan while the apartment is being built. Once it nears completion and the rest of the purchase price is due to the developer, the buyer will transfer to Keystart’s Urban Connect Home Loan.

Income and property purchase limits for the Urban Connect Home Loan are a sole income of $180,000 for singles with a property purchase limit of up to $560,000, and combined income of $200,000 for couples and families with a property purchase limit of up to $650,000.

The state’s Housing Minister, John Carey, described the initiative as an attempt to acknowledge that developer deposits may still be keeping willing buyers out of the off-the-plan market due to the challenge of saving for the upfront costs.

“Many home buyers may not have the funds available upfront to cover the developer’s off-the-plan deposit, and this new loan product will provide more housing choice and options to Western Australians,” he said.

The new loan product was welcome news to the Real Estate Institute of Western Australia, with CEO Cath Hart noting that with developer deposits sometimes as high as 10 per cent of the purchase price, they can form a “significant barrier to entry for potential buyers”.

“The Urban Connect Plus package allows eligible buyers to access a loan to cover the deposit, overcoming this barrier,” Ms Hart said.

At a time when an influx of supply is desperately needed, Ms Hart noted that this program could serve as integral fuel to spur on housing construction.

“From a developer’s point of view, deposits are needed to get apartment projects out of the ground. This initiative should also help stimulate building in this sphere, which is greatly needed to provide more affordable and diverse housing options for buyers.

“We commend the Cook government for its ongoing actions to help more people into home ownership, and also its initiatives supporting apartment development,” Ms Hart said.

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