Don't be distracted by the headlines
A major bank made the news in January for relaxing their lending criteria for first home buyers—meaning more borrowers with a 10 percent deposit could be eligible for a mortgage.
While it appears to be encouraging news for first-home buyers, in reality there has only been a small shift in the amount of new lending available for people with a 10 percent deposit. Banks can now allocate 15 percent of their total lending ability to these applicants—up from 10 per cent. This means 1.5 in every 10 mortgage applications instead of 1 out of every 10.
Lending thresholds are set by the Reserve Bank, and banks are typically conservative and work hard to be well within these limits.
Our advice to first-home buyers remains the same:
- Save as much as you can,
- Do all of the necessary homework before applying for a loan, and
- Be aware pre-approvals are tricky to obtain, and the final sign off on a loan can depend on the condition and state of the house in question.
HomeStart Grants and Welcome Home Loans are still available and a really good option for first home buyers.
Working with a trusted mortgage adviser can help you quickly get past any roadblocks and put you in the best position possible. If buying a house is on your wish list this year, talk to us today on 0800 000 517.