Should you wait until you have the 10% deposit BEFORE buying your home?
For many years, people that were wanting to join the first home owners club diligently saved a 10 percent deposit, but now the Federal Government’s first-home buyers deposit scheme allows people to save only 5 percent of their desired loan amount. Is this the saving grace many people have been waiting for, or will you end up spending more than initially thought? RE/MAX Profile has been servicing the real estate sector for decades and with a team of experienced, licensed real estate agents on our side, we’ve decided to share our thoughts on this new Federal Government home loan scheme that is being offered.
How does it work?
Housing affordability still remains a hot issue in most of Australia’s booming cities, with dwellings reaching sky-high price points pushing them further out of reach for a lot of potential homeowners. The Federal Government has decided to try and remedy the situation by lowering the minimum deposit requirement to just 5 percent and waving the lender’s mortgage insurance (LMI) fee. This then provides a significant saving as LMI is usually charged to those who borrow with low deposits.
The problem lies here – while this might be appealing for some of you reading this, you need to be aware that you may end up paying more over the duration of the loan. Hypothetically, if you had a 20 percent deposit, you would save even more money over the life of the loan because you’d be borrowing less and paying less interest. This is where it is up to you to sit down and go through a budget and see if it will work for you.
It might suit your situation
It should be noted that there is potential to get into your own home sooner by utilising this new scheme if it suits your specific circumstances. If you’ve been saving hard but have not been able to get far enough ahead, this is a great time for you to get in and secure a property. There are also intangible benefits to being in a property such as safety and security. Those who own their own home will attest to these intangible benefits that owning a home provides, just be sure you don’t make these first home buyer mistakes.
At RE/MAX Profile, we implore you to do your research to understand exactly how utilising this scheme would affect you. For some, it may not be worth it, given that they have to pay back more interest from their mortgage over the course of the loan. For others, it may be suitable and the increase in the property value where they buy may offset the extra money they need to spend on repayments. This is entirely dependant on your personal situation and you should consult your finance broker. If you’d like to talk to our real estate professionals, you can phone RE/MAX Profile on (07) 3510 5222 or use our online contact form located here.