Aboriginal Home Loans

Aboriginal home loans in Australia are designed to bridge the gap in the home ownership between indigenous and non-indigenous Australians. The main feature of this financial arrangement is:

  • Lower than usual interest rate
  • Lower deposit
  • Possibility of an extended loan term.

The aboriginal home loans in Australia apply to members of Aboriginal and Torres Strait Islander community or their descendants. The relevant governmental institutions scrupulously check the identity of the applicants who apply for the loan.

Many non-indigenous Australians object to the affirmative action system. However, all political parties and many financial institutions agree that the house ownership is a key to uplift indigenous communities.

Where and How to Apply for Aboriginal Home Loans in Australia?

The department of Australian Government - Indigenous Business Australia (IBA) - is responsible to assist indigenous Australians with home ownership. The IBA will assess if the applicant:

  • Meets the Aboriginal and Torres Strait Islander descent
  • Meets the age requirement (at least 18 years of age)
  • Meets the financial requirements (may need to fund loan from another lending institution)

There are strict guidelines for applicants to prove their indigenous ancestry. There are:

  • Statutory declarations to state the indigenous origin
  • Community verifications that the applicants (or their descendants) are of indigenous origin
  • Departmental confirmation of the applicant's declaration

Finally, only first home buyers are eligible for this assistance. However, in special circumstances IBA can grant loan to the non first home buyer.

Aboriginal Home Loans' Products

Most Aboriginal Loans in Australia apply to first home buyers who have the capacity to repay the loan. Generally, the repayment of this low interest, low deposit financing is extended over 32 years.

In special circumstances a further term extension to 45 years can be granted to reduce the burden of repayments. In some cases Indigenous Business Australia will ask the applicant to source part of the money from other financial institutions. There are three loan products:

  • Financial assistance to purchase or construct a house
  • Financial assistance to purchase a residential land
  • Split loan

The first two products are self explanatory. However, the split loan has some complexities.

Generally, split loan allows the applicant to borrow some money from the IBA and the rest from the financial institution. This is a more convenient system to get a quicker approval and flexibility.

The downfall of the split loan is that part of the money is borrowed on the higher interest rate. However, financial institutions offer more options to repay the loan and provide a better customer service.

In addition, Indigenous Business Australia often negotiates with the lending institutions a better deal for their indigenous applicants.