First home buyers are “in” in terms of lender appetite!
First Home Buyers now account for 19.6 per cent of all new home loans in Victoria.
And the borrowing amounts are at historic highs, at $349,800 on average, which is a 10.1 per cent increase year-on-year.
This comes largely off the back of the generous stamp duty waiver and First Home Owners Grant, particularly here on the Surf Coast where the grant is double our metropolitan cousins at $20,000.
And at a time when general borrowing conditions have tightened, the areas where the banks want to compete, are on show – and First Home Buyers top the list.
As a result, the terms available to some occupations, and simple applications can be generous:
- Up to 40-year terms
- Loan to Value Ratios as high as 98 per cent including Lenders Mortgage Insurance
- No genuine savings required where steady rent can be demonstrated
- Fee waivers
- Low fixed term rates (up to 5 years)
- Multiple offsets with no ongoing fees
- And lenders have been attempting to simplify Parental Guarantee arrangements to ensure parents can “un-hook” from the arrangement more easily once the kids satisfy the 80 per cent LVR hurdles.
But First Home Buyers (and their Parental Guarantees) need to proceed with caution. Some of the big things to watch:
- Lenders Mortgage Insurance (LMI) will add thousands to the cost of a loan if a Parental Guarantee isn’t available, or a prudent option
- Parents with an existing mortgage in place need to be very cautious, as the arrangements can hinder future options, particularly for the parents
- LMI does nothing to protect the borrower, only the bank, so life insurance cover must be reviewed in light of new debt
- Even though stamp duty is exempt (for properties under $600,000, and subject to concession up to $750,000) there are still transaction costs to factor such as more minor government taxes, conveyancing fees, building inspections, loan application fees, and the like
- Savings and repayment capacity must be evident, through steady income and expense assessment
- New expenses are often forgotten such as rates, water and other utilities, as well as body corporate fees in some cases, and need to be factored into the budget
- There is no “cooling off period” at Auction, or for three days after an Auction has taken place
- And auctions typically require a 5-10 per cent deposit to be paid on the day.
Surfcoast Life & Lending are running an Education Workshop for First Home Buyers on Tuesday October 2.
First Home Buyers and/or Parents all welcome.
Tickets $20 and must be purchased in advance as numbers are strictly limited.
For more information, call 0418 938 646, visit surfcoastlifeandlending.com.au, or follow them on Facebook.