Amazingly easy for first home buyers to enter the market!

So excited to tell you that Elodie in my office has organised a loan for a single mum under the governments new Family Home Guarantee. Our client would not have been able to get into a home like this as soon as this without that scheme. 

So I have been looking into why it is such a big market for the first home buyer. If you can’t use bank of mum and dad, (or if you are a mum or dad that can’t help) and you don’t have massive savings, it can be hard to envisage getting into your own home. 

Here are some of the offers out there. All of them have caps on how much can be borrowed, property value, and income limits…

•  First home loan deposit scheme / 5% deposit scheme – the government guarantees the loan which means you avoid mortgage insurance
•  $1 Lenders Mortgage Insurance is available at two of the lenders we deal with to 85% of the property value

Why is avoiding mortgage insurance so important?

Lenders mortgage insurance protects the lenders against the (rare) possibility of failure to pay your home loan – and costs up to 4% of the loan amount.

• New home guarantee – again a 5% deposit but with the proviso it’s a new home
• Family home guarantee – this is my hero – helping single parents get into a home with 2% deposit (plus costs)
• Super Saver Scheme  - where you can make additional payments into super (still within the concessional cap) and save up to $50k. Super is complicated so make sure you understand how much you can add
• First Home Owners Grant- most states have this available as a $10,000 bonus for buying a new home

Most lenders will allow borrowing to 95% of the property value including mortgage insurance (this effectively means around 92% of the property value so you need 8% plus costs).

• 99.9% loan allow you to borrow including mortgage insurance on an established property if you are able to meet this lenders criteria
• 95% loan plus mortgage insurance on established and new builds if you are able to meet this lenders criteria.
• Essential workers overtime and shift allowances included as income – and a range of other benefits with some lenders.
• First Home Buyers special rates with many lenders
• Medical / Legal / Accounting professionals may be eligible for  no mortgage insurance
• If you are self employed many lenders are scrapping 2020 and using 2019 returns. 

Phoebe x