This is an area of lending that is about to change markedly, and it impacts on how much money you need to buy your first home. (in a good way!!)
This is where we are right now – 95% loans are all about the treatment of Mortgage Insurance. (A one-off premium to protect the lender’s position, approximately 3.5%)
1. Lenders require YOU to pay all of the mortgage insurance (MI) from your money – so their loans are still 95%.
Costs vary from state to state – but let’s look at a $500k purchase in Qld where a first home buyer pays no stamp duty; Costs will then be approx. $2,500 and are inclusive of things like Solicitor, settlement and government fees. (I can explain these all in more detail, for your particular circumstance, if you “Ask Alan”).
So to put it into a monetary perspective (for our $500k Qld purchase);
You need $25,000 + $2,500 + $15,000MI = $42,500
This is quite a hurdle for First Home Buyers in particular.
Now to where we are going.
2. During the election campaign in which First Home Buyers featured – both sides of politics agreed that the Federal Government (through the National Housing Finance and Investment Corporation: NHFIC) would take the role of the mortgage insurer at NO COST to the First Home Buyer.
Once up and running – 1 Jan 2020 – the First Home Buyer will now only need $27,500.
The message – the pathway to your own home is much easier.
This can either be saved over 3 months or (if you are lucky enough to have access to the Bank of Mum and Dad) gifted and held in your bank account for 3 months.
The rules around savings and gifts are technical so…Why not Ask Alan – it’s what I’m here for.
Ask Alan – Your online mortgage broker.