category
Dec 9, 2025
Barefoot Investor shares warning over five per cent deposit scheme
Daily Mail Online
The Barefoot Investor has warned Australians not to rush in and use the five per cent home deposit scheme after a couple revealed they are facing bankruptcy.
In his latest column, Scott Pape shared the sobering story of a young family who thought they were making the right choice when buying their first home.
'We saved $40,000 and got into Sydney's property market in early 2024 using the five per cent deposit scheme,' the couple said.
'Not long after settling, we discovered why the apartment seemed affordable.'
After moving in, the couple faced major building defects, soaring strata fees, and harassment from neighbours.
Eighteen months later, they moved out, listed the property for rent, and are now paying both rent and the investment loan, with no tenant interest and pressure to drop the lease by $150 below market value.
'If we sell, we'll break even but be locked out as Sydney prices soar. If we hold on, we risk bankruptcy. What would you do?' they wrote.
They say they did everything right, claiming they followed 'all the Barefoot steps'.
Scott Pape (pictured) urged first-home buyers to not rush in due to fear of missing out
Pape disagreed, arguing they did not follow his steps.
He then criticised Prime Minister Anthony Albanese and Labor's housing policy.
Albanese's housing policy expanded the First Home Guarantee Scheme, allowing all first-home buyers to purchase with just a five per cent deposit.
The government acts as guarantor on the loan, eliminating the need for costly Lenders' Mortgage Insurance.
The scheme was originally brought in by the Coalition in 2020, but was only available for low-income households, and was capped at a certain number of users.
'You followed Albo and his dud policy: "Only Labor will help you buy a home right now!" And you did,' Pape wrote.
Pape said their experience was a textbook example of what happens when urgency and FOMO take over.
'In which Barefoot Step does it say to take out a loan with a five per cent depos
