How to get into a new home with just $10,000

A new ‘win-win’ homebuying scheme backed by one of Australia’s biggest lenders can get property seekers into a home for as little as a $10,000 deposit.

First-home buyers have long displayed wise self-restraint when it comes to buying off the plan (OTP) apartments because of the in-built price premium of buying new. Developers have periodically sought to lure them away from cheaper established apartments by offering low deposit opportunities.

Now the Commonwealth Bank of Australia has breathtakingly signed on to a fintech innovation that facilitates buyers starting their property acquisition with just a $10,000 deposit.

That’s anything from $30,000 less than a standard 10 per cent deposit requirement in this buy now, pay later Afterpay-for-apartments-like scheme.

The scheme is being heralded as a “win-win” by the neophyte property tech platform Coposit.

They suggest it will fast track pre-qualified first-home buyers into the market while developers will get the financing needed to start building.

A new homebuying Afterpay-type scheme backed by one of Australia’s biggest lenders can get property seekers into a home for as little as $10,000 deposit.

The $10,000 deposit scheme from Coposit, which was founded in 2020, is initially applicable to 65 OTP projects that have signed up to Coposit’s app platform.

They include projects HYG’s The Botany Waterloo, Mulpha International’s Norwest Quarter and The Newlands by Top Spring at St Leonards. The projects are located in NSW, Queensland, ACT and Victoria.

Under the CBA-Coposit scheme, the buyer is programmed to pay the balance of the 10 per cent deposit in weekly, interest-free payments during the typical two- to three- year construction phase before then entering into a traditional purchasing mortgage when the project is completed, not necessarily with CommBank.

The reason behind the interest-free payments is because Coposit’s business model is based on receiving a fee from developers.

It’s therefore not a first-home buyer loan or financial product, as Coposit doesn’t fund the buyer.

Coposit makes its money when a pre-sale occurs and they charge the developer a fee.

Coposit will hold the money in a trust pending settlement. The incentive for developers to join Coposit’s platform is the CBA arrangement allows the $10,000 deposits to be assessed as 10 per cent deposits by CBA to speed up project construction loan approvals.

CBA business banking executive Mike Vacy-Lyle hopes the initiative would help fast-track new supply to the market.

“This scheme will deliver greater certainty for property developers, who can include these sales in their pre-sale hurdles when seeking financing of their projects,” he says.

“This is an important step in facilitating better lending outcomes for new residential developments, to help fast-track new supply.

“Initiatives like this could make a real difference, particularly for first-home buyers, by allowing them to secure the purchase while continuing to save for the initial deposit until the property is built.”

CBA will limit its exposure to 10 per cent of pre-sale contracts in any Coposit supported project, with the rest needed from traditional OTP sales contracts.

No doubt CBA will be closely monitoring the weekly discipline shown by the first-home buyers in servicing their debts.