Indigenous Business Australia (IBA), along with other lenders, help Indigenous Australians achieve their goal of home ownership.
With many individuals spending their life working towards home ownership, owning your own property or land is the Australian dream. The Australian Government has introduced a range of measures to assist Indigenous Australians in realizing this dream through the Indigenous Home Ownership Program. This program is designed to help Indigenous Australians purchase their own home or land with specially designed home loans.
What loans are available for Aboriginal Australians?
Although there are no restrictions for Aboriginals to access home loans from any financial provider, the Australian Government and IBA have introduced unique schemes and home loan products that are designed to make property purchasing more accessible to Aboriginal Australians.
One such support program is concessional housing finance and aftercare support for eligible customers. This allows recipients to purchase an established residential property, land and/or construct a new home, or make essential improvements to existing homes. There are also grants for those customers who will be first home owners.
Indigenous Business Australia Home Loans
IBA have introduced the Indigenous Home Ownership Program to provide financial assistance to Indigenous Australians and ensure they have access to the property market.
These loans can be used for the purpose of purchasing a home that meets your family’s needs, including for the construction of a new home. IBA home loans will not be issued for the purpose of purchasing an investment property or a property that will be used for business purposes.
These home loans and incentives are unique and have a few features that make them stand out from other home loans:
- Low deposit requirement. These types of home loans have lower deposit requirements compared to other loans. This means that applicants don’t have to save up for as much of a deposit, helping them to get into the property market sooner.
- Low-interest rate. The interest rate for these types of loans is a concessional interest rate. Your interest rate will be linked to your income so you will be able to afford repayments. This interest rate gradually increases to reach the market variable rate, giving you time to adjust spending and get used to making the mortgage repayments.
- Standard loan terms. These home loans have standard loan terms of up to 32 years, but the loan term may be extended to assist you in repaying your loan.
- Additional finance assistance. There’s also additional finance assistance available for individuals wishing to build a home on communal land.
What are the eligibility requirements for IBA housing loans?
- Over 18 years of age.
- At least one applicant must be of Aboriginal or Torres Strait Islander descent.
- Must be able to meet minimum deposit requirements, may be able to get assistance from the first home buyers grant scheme of your state or territory.
- Be able to have the capacity to meet housing loan repayments.
- Meet further housing loan requirements that are relevant to your home purchase.
- Download and submit an Expression of Interest form, a Confirmation of Aboriginal or Torres Strait Islander Descent form and a completed Consent to use your personal information form, all of which you can find on the IBA website.
- Along with the forms you will also need proof of income, evidence of your ability to pay legal fees and stamp duty costs, evidence of your ability to pay the deposit and details of current land or home ownership not financed through IBA.
- If you are deemed eligible, your name will be added to the Expression of interest register and you will be invited to apply for an IBA housing loan as funds become available.
- When funds become available IBA will contact you and ask you to submit a Housing Loan Application, this will then be used to see if you qualify and how much you may be eligible to borrow.
IBA may only offer you a loan for part of the amount you've requested or need to make your purchase, you will then be required to seek the remainder of the funds from an alternate lender. During the application process, your credit history will be assessed by IBA. You can find out how you stand with your current credit history you can order a credit history check.
What are some of the costs to consider when you are looking to apply for an IBA Home Loan?
There are other fees and charges associated with an IBA Home Loan or purchasing a home in general that will need to be taken into consideration when making this decision.
There are the legal costs associated with home purchase as well as building and pest inspections that should be carried out on the property you are looking at purchasing. You will also have to pay for stamp duty or land tax and mortgage registration fees, if you are a first home buyer you may be eligible for some concessions on some of these.
You can also speak to you lending specialist to discuss any other assistance they can offer for these other costs. Also, speak to IBA about the fees associated with their loans.
|Mortgage discharge fee. This fee is applied when you complete your loan whether it be through selling the property or refinancing with another lender.||$330|
|Security dealing fee. Charged at times when IBA is asked to produce the original title of the property, such as if you change the name on the title IBA may be asked to provide the title to the land titles office.||$165|
|Late payment administration fee. When loan repayments are unpaid for a period of 28 days or more beyond their due date and not alternate payment arrangements have been made.||$20|
These fees are charged by IBA there may be additional government fees and charges to be paid.
Next steps for an IBA Home Loan
If you are interested in finding out more information on the IBA home loans or you want to discuss your options, you can visit the Indigenous Business Australia website. This site contains all relevant information and forms as well as contact details for your nearest IBA office.
Keystart Aboriginal Home Loans
If you live in Western Australia, you can take advantage of a Keystart Aboriginal Home Loan. This gives you two options: to buy the property in a shared ownership scheme with the Department of Housing, or full ownership of the property. The deposit required depends on the size of the loan but begins at 2% for properties below $480,000. No lender’s mortgage insurance (LMI) is charged.
Borrowers can make additional repayments on top of the regular monthly repayments and use a redraw facility.
The maximum amount you can borrow depends on whether or not the property is purchased with the Department of Housing in a shared ownership scheme, or you take full ownership, and where in WA you’re buying the property. The maximum loan term is 30 years.
Other home loan types
If the loans mentioned above aren’t available to you, there's still a large number of different home loans which you might want to compare. Some of these include:
- First home buyer loans. First home buyer loans are designed to assist those purchasing their first property. These loans can offer low-interest rates for the first year of the loan and flexible repayments and minimum deposits.
- No frills loans. These are fixed or variable rate home loans with fewer features than regular home loans but lower interest rates and fees.
- Investment loans. Investment loans are for investors who need to borrow additional money when making an investment (typically land or property). These loans can either have a fixed or variable interest rate and are designed to meet investment needs.
- Low deposit home loans. Low deposit home loans allow you to borrow money for a home with a minimal deposit. Typically, you can borrow as much as 95% of the amount required upfront. These loans are common for first home owners who want to fast track entering into the market.
What should you look for when you are comparing any home loans?
- Interest rate. One of the most important aspects of a loan is the interest rate. You may want to look for a home loan with a low interest rate. Also, decide upfront if a fixed or variable interest rate is better for you and select a loan product accordingly.
- Flexibility in repayments. Some home loans offer greater flexibility in repayments than others. You may be able to make additional repayments when you have the funds as it helps you save on interest. Also, look out for whether you can make weekly, fortnightly or monthly repayments and whether this will line up with your budget.
- Loan term. Term lengths will vary depending on what home loan you decide to go with. This is how long your loan is for and the period of time you have to pay it back. This can vary depending on how much money you borrow so ensure you select a loan with a long enough term length for you to pay off your loan.
- Restrictions Some loans have various restrictions in terms of repayments, redraws, and deposits. Take a look at the terms and conditions imposed by the lender and if this will affect your ability to make repayments. Some of the government schemes also require you to meet certain requirements and terms, so ensure you meet all of these to avoid any penalties.
One of the most important things to avoid when borrowing is not to borrow more than you can afford. Make sure you don’t fall into too much debt and don’t borrow beyond your means. Know how much you can make in repayments and how much of a deposit you can put forward without damaging your ability to cover your living costs.
Frequently Asked Questions about Indigenous Home Loans
How do I apply for a housing loan with the IBA?
There’s a two-step program for applying, see our more in-depth description of how to go about applying here.
First you need to register your interest by completing an Expression of Interest Form and a Confirmation of Aboriginality or Torres Strait Islander Descent form. After this, the IBA will contact you further, and if you are successful you will be placed on the Expression of Interest Register.
How much can I borrow?
This will depend on your income, expenses and repayments on any other liabilities you have.
What will my repayments be with a loan from the IBA or Keystart?
Your repayments will be tailored to your income.
How does an IBA or Keystart loan work for a first time home buyers?
You can apply for and receive an Indigenous Home Loan alongside any First Home Owner Grant Scheme as long as you are able to fulfill the eligibility requirements of both schemes. IBA also offers some special offers on their loans for First Home Buyers.
Can I refinance my current loan with another lender over to an Indigenous home loan?
Yes you may be able to do this but there may be fees and charges attached to your current home loan that you will need to pay, so it would be best to contact your current lender to discuss this with them before you contact IBA or Keystart.
Can I take advantage of this scheme to get a home loan if I am a single parent and my children are of Indigenous descent but I am not?
Unfortunately, you won’t be able to purchase a property under this scheme unless your children are a joint property owner. At least one applicant needs to be of Aboriginal or Torres Strait Islander descent in order to qualify for this scheme. And your children will need to be at least 18 years old before they’re eligible for the scheme or be named on the loan or property documents.