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Taking the plunge - First Home Buyers on the Look Out
Looking to escape the tightening rental market? First home buyers ready to move into home ownership can now borrow the full purchase price – and beyond!
First home buyers are again eyeing the property market as a combination of escalating rent costs and predicted stabilising interest rates make homeownership an attractive option.
There’s no doubt that budgeting and opening an interest-bearing savings account are sound ways to build up funds, but it may still be insufficient for a traditional 20 per cent deposit. Borrowers, however, now have more options with many lenders offering 100 per cent home loans.
The 100 per cent loan allows you to borrow the full amount of the property’s purchase price. If you’re a first home buyer with little or no debt and a clean credit history, a higher percentage loan could help you secure your property quickly, side stepping the need to save for a deposit.
Bear in mind that the more you borrow for your property the greater the repayment will be. That could mean higher monthly payments or a longer term to repay the loan. But many Australians are undeterred by these factors, with current statistics indicating the increased number of first-home buyers financing their first foray into the property market with high LVR (loan-to-valuation ratio) loans.
So is a 100 per cent loan right for you? Here are its pros and cons:
The Pros
- You can borrow up to 100 per cent of the property’s value. Shop around for a lender that will allow you to borrow the amount you are looking for, with reasonable interest rate charges. You’re mortgage broker is well geared to help you explore the different options available.
- Some financiers offer high LVR loans at standard variable rates.
- Most high LVR loans have redraw facilities, often at little or no charge.
The Cons
- Higher loan fees and/or interest rates.
- Some lenders may restrict the location of acceptable properties.
- You may be required to pay mortgage insurance; as such you must meet the insurers’ credit standards.
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Did You Know?
Purchasing your first property, and need finance?
Contact Lending Hand Finance on
1300 850 545 or
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