Gen Y First Home Buyers Have Options
Potential first home buyers keen to enter the real estate market but unsure of how to overcome common home loan issues such as building a deposit have options, says leading mortgage broker Loan Market.
Loan Market Melbourne westside senior finance broker Hannah Nguyen said many first home buyers are unaware of their financial requirements when it comes to securing a home loan.
Ms Nguyen said many first home buyers believe it is still possible to borrow 100 per cent of the purchase price, when unfortunately this finance option is no longer available.
“Many Generation Y first time buyers who have minimal savings do not realise that they can get help from their parents or other family members, which can assist them in securing home finance,” she said.
“This option does not come without conditions, including one that the parents’ property is preferably unencumbered. But with good equity, first home buyers can still borrow 100 per cent of the purchase price plus other associated costs without showing their savings history.
“In this situation, two loans are taken out. One loan is taken out at 80 per cent of the property value and is secured by the buyer and the second loan is taken out for the remaining 20 per cent, and is secured by the parents.
“The benefit of this option is that there is no requirement for lenders mortgage insurance. However it is important that in this situation, all parties are aware that in the case of default, the parents are liable for the 20 per cent they secured.”
Ms Nguyen said if first home buyers want to secure their dream home by themselves, some of Loan Market’s lending panel offer 95 per cent home loans, adding an additional credit card with the limit of $20,000 at home loan interest rate.
“This will effectively assist first home buyers to purchase a property of $400,000 at 100 per cent finance,” she said.
“In this situation, the lender does require the applicant to prove that they have saved five per cent of the purchased price in their bank account regularly in the last three months.”
Ms Nguyen said first home buyers should check with a mortgage broker to ensure they have investigated all their options and to obtain the home loan that best suits their financial situation.