Shared equity scheme
A shared equity agreement allows someone to help you purchase a property by paying some of your costs. But they also get some of the property's equity when you sell.
Key takeaways
- A shared equity scheme makes it easier for you to buy a home by allowing a third party to contribute some of the deposit or purchase price.
- In exchange, this partner receives a portion of future equity when the home owner sells the property. In other words, they help you buy the property and you owe them in the future.
- Shared equity schemes can be a viable option for home buyers on lower incomes. Private schemes are quite rare in Australia, but the federal government's Help to Buy scheme is open to eligible buyers through participating lenders.
How do shared equity agreements work?
Shared equity schemes vary depending on who is offering the agreement, but they generally work like this:
- A home buyer finds an equity partner to fund a portion of their property purchase.
- The home buyer finds a suitable property to purchase.
- The home buyer applies for a regular mortgage to cover the remaining purchase cost not covered by their deposit and the equity partner's contribution.
- Optional: As time passes, the home buyer can choose to repay some or all of the equity partner's costs (plus equity). However, not every SEA allows this.
- Finally, when the buyer sells the property, the equity partner receives their contribution back plus a proportionate amount of equity (if the property has risen in value).
As stated above, some SEAs allow you to repay the equity partner's contribution over time, rather than when selling. Regardless of when you repay the contribution, you will have to pay a matching portion of equity if your property has grown in value.
What are the risks of buying property with a shared equity agreement?
Shared equity schemes are unusual arrangements and not very common in Australia. While they are not inherently risky, there are a few things that potential borrowers need to be aware of. First of all, your equity partner has a stake in the future value of your property.
If your home rises in value they will receive a fair portion of that value. This is either when you sell the property, or sometime after buying the property.
If your property loses value (this is called negative equity) then you may end up owing the equity partner more than the property's value. But this depends on the specific details of your agreement. In some shared equity schemes, negative equity simply means that the equity partner takes a loss when their contribution is repaid.
Who offers shared equity schemes?
The following organisations/people may offer shared equity schemes:
- The federal government (Help to Buy)
- State governments
- Non-profit organisations
- For-profit lenders
- Private individuals
Some state governments have shared equity schemes that allow people in government housing to buy their properties from the government. Non-profits usually offer shared equity schemes to home buyers on low incomes.
Other shared equity agreements are offered by for-profit banks but these are quite rare in Australia.
FrontYa
FrontYa is a new entrant to the market that operates a kind of shared equity scheme, although it's marketed a bit differently. FrontYa will "front you" half your purchase funds, effectively doubling the amount you have to cover your upfront costs like the deposit and stamp duty.
How it works
If you've saved $100,000 to buy a home, FrontYa will provide a further $100,000. The catch? You either have to sell the property or refinance the loan within 6 years. When you do this, you have to pay back FrontYa the full amount they provided, plus 25% of the increase (if any) of the property's value in that time. You own the property in full, but FrontYa has a caveat over the loan (this means FrontYa is legally making a claim to an interest in your property, but they do not own it).
Let's say you buy a $700,000 house with $100,000 of your own money and FrontYa matches you. 5 years later you sell the property for $825,000. FrontYa gets $100,000 from the sale, plus 25% of the increase in price. The property grew in value by $125,000, so 25% equals $31,250. In total, you pay out $131,250 to FrontYa.
Help to Buy Scheme
The federal government runs a national shared equity scheme, administered by Housing Australia, called Help to Buy.
Eligible buyers need a minimum 2% deposit and a home loan from a participating lender. The government contributes up to 30% of the purchase price for an existing home or up to 40% for a new home (subject to eligibility criteria, income limits and property price caps), and there are 10,000 places available each year. In exchange, the government owns a proportional share of the property (and shares in any subsequent gain or loss in value).
Buyers can pay this share back when they sell, refinance, or make incremental buy back payments.
Are there any alternatives to a shared equity scheme?
If you're struggling to get a deposit together to buy a property there are a few alternatives to shared equity schemes:
- Get a mortgage guarantor. If you have a willing family member who owns their own property, they can guarantee a portion of your deposit. There's some risk for the guarantor, but unlike shared equity schemes, the home buyer doesn't lose any of their equity.
- Find a low deposit home loan. You can get a mortgage with just 5% of the price of the property. The main drawback of a low deposit mortgage is that you have to pay lenders mortgage insurance.
- Use the 5% Deposit Scheme. Under the federal government's 5% Deposit Scheme, eligible first home buyers can buy with a minimum 5% deposit (or 2% for eligible single parents and legal guardians) without paying lenders mortgage insurance. Property price caps apply.
- Purchase a property jointly. You could buy a property with a partner, close friend or family member. It's not an option for everyone, and there are obvious downsides. But it is an option for the right borrower.
- Rentvesting. Keep renting in an area that you like living in, but purchase an investment property in an area that you can afford – then rent it out.
Read our in-depth deposit saving guide for more tips on building a mortgage deposit for yourself.
More resources on Finder
Ask a question
2 Responses
More guides on Finder
-
Household Capital home loans
Read our detailed review of reverse mortgage lender Household Capital.
-
Average home loan interest rates in Australia 2026
We compile the average home loan interest rates in the market and update them monthly.
-
First Option Bank home loans
Your guide to home loan offers from First Option Bank.
-
Compare bank interest rates in November 2026
Compare current bank interest rates for home loans, credit cards, personal loans, savings accounts and term deposits to find the best deal for you.
-
Home loans for contractors
Searching for a home loan for contractors? When you don't earn a regular wage, find out how you can still get a home loan.
-
Investment home loan rates
The best investor home loan rates that have been offered in years have hit the market. Compare investment property loan rates today.
-
Cheap Home Loans Australia
Find the cheapest home loan rates and learn how to decide which one best fits your needs and will save you the most money.
-
Best variable home loan rates
Find a great deal on a variable interest rate home loan from lenders large and small. Start comparing and saving today.
-
Best home loan rates in Australia November 2026
Learn how to compare rates to find the best home loan and start saving money on your mortgage today.
-
Compare conveyancing services in your area
Compare conveyancing services to find a professional who can help you manage the legal side of buying or selling a property.
Is there a maximum % you can obtain from an equity partner? I have a great deposit ($150,000) but live on a pension so can only borrow a small amount (~$140,000). If I wanted to buy a house for ~$420,000, I need another $130,000. Is that feasible?
Hi Natalie,
For shared equity home loans, eligible homebuyers must have at least a 5% deposit ready. The equity partner will then contribute and cover the rest of the deposit, which usually ranges from 20% to 30% of the total value in exchange for co-owning a share of the property with you.
The criteria and eligibility requirements vary for each lender. You can refer above for lender options or check your state government website for information on offers for shared equity schemes.
I hope this helps!
Regards,
Richard