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Major bank offers $1 insurance for first home buyers
A big four bank subsidiary is offering first home buyers a $1 lender’s mortgage insurance as it looks to support first home buyers.
Major bank offers $1 insurance for first home buyers
A big four bank subsidiary is offering first home buyers a $1 lender’s mortgage insurance as it looks to support first home buyers.
Effective Monday, 13 July, St.George has reduced lender’s mortgage insurance (LMI) to only $1.00 for eligible first home buyers with a loan-to-value ratio up to 85 per cent.
To be eligible, the maximum size of the mortgage would be $850,000 on a loan worth $1 million and needs to be an owner-occupier home with principal and interest payments.
Under the scheme, home owners with a property value of $650,000 who would usually have to make a one-off LMI insurance payment would save more than $6,000.
This means first home buyers looking to get into the market would effectively need to save a 15 per cent deposit instead of the traditional 20 per cent of the value of the property purchase price.
St.George general manager Ross Miller said: “We are seeing many pain points experienced along that savings journey, including giving up holidays, reducing entertainment expenses, having to move back home with parents, moving in with friends or even leaning on family members to help top-up savings.
“By reducing the expense of lender’s mortgage insurance, first-time purchasers may be able to afford a property that meets their needs sooner and save thousands of dollars.”
Saving for a deposit is one of the biggest barriers to home ownership for first home buyers, with St.George research revealing the entire process of saving and planning can take almost 10 years.
The 2020 St.George Home Buying Report found that two-thirds (64 per cent) of first home buyers expect to face financial problems leading up to their first property purchase, including the most common difficulty, building up a deposit (50 per cent).
Close to half (48 per cent) are saving more in order to buy in their desired area, and nearly three in every 10 first home buyers are struggling to find a property that suits their needs.
St.George research showed that one in every 10 Australians looking to buy a home are doing so for the first time and that the COVID-19 pandemic has made one-third of Australians want to save for that goal quicker.
“Australians have spent more time at home than ever before during the COVID-19 restrictions, and we are seeing a bigger trend in how the nation is re-evaluating their current living situation. For example, three-quarters of people would now prefer to live in a house over an apartment,” Mr Miller said.
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