First Home Loan Deposit Scheme

<p>Some 30,000 new places are available under the Australian Government&rsquo;s First Home Loan Deposit Scheme, the New Home Guarantee, and the Family Home Guarantee from July 1, 2021.</p>

<p>Some 10,000 additional places have been released under the First Home Loan Deposit Scheme for the 2021-2022 financial year.&nbsp;</p>

<p>The scheme supports eligible first home buyers purchase an established home or a new home sooner with a deposit of as little as 5 per cent.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=27406 project_image_fid=68117]</p>

<p>New property price caps will apply from today for the First Home Loan Deposit Scheme.</p>

<p>These property price caps also apply to the Family Home Guarantee, a scheme which was announced in the 2021-2022 Federal Budget to support eligible single parents with at least one dependent child.&nbsp;</p>

<p>There will be 10,000 Family Home Guarantees made available over four financial years from 1 July 2021 to buy a new or existing home with a deposit of as little as 2 per cent.</p>

<p>The New Home Guarantee, announced in October 2020, is specifically for eligible first home buyers building or buying a new home with a deposit of as little as 5 per cent.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=3260 project_image_fid=62318]</p>

<p>It has been extended under the 2021-2022 Federal Budget with 10,000 new places available from 1 July 2021 to 30 June 2022.</p>

<p>Applications for the three schemes can be made through participating lenders or mortgage providers.</p>

<p>Information about the schemes, price caps, eligibility requirements and how to apply can be found on the <a href="https://www.nhfic.gov.au/what-we-do/support-for-buying-a-home/">updated website here</a>.<br />
&nbsp;</p>


From today, 30,000 new places are available under the Australian Government’s First Home Loan Deposit Scheme, the New Home Guarantee, and the Family Home Guarantee.

jchancellor

30,000 government grants for property buyers kick off July 1, 2021

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<p>Coronavirus-impacted “pockets” of Sydney’s north-west and inner-south-west have seen falling median values create opportunities for first home buyers, according to CoreLogic head of research, Eliza Owen.</p>

<p>Although Australia’s residential property market has shown resilience, despite the shock of the pandemic, recent value falls may have created an opportunity for first home buyers who want to take advantage of the first home loan deposit scheme (FHLDS).</p>

<p>On February 3, minister for housing Michael Sukkar announced the reissue of around 1,800 FHLDS places, creating opportunity in suburbs where unit medians have slipped below the Sydney threshold of $700,000.</p>

<p>As of January 2021, there was an average of 107 suburbs observed in the capital cities with a median value at or below the qualifying threshold for the FHLDS, assuming the application is for an established property.</p>

<p>In Sydney, where international border closures have created a particular demand shock, median unit values have declined up to -$88,146 between March 2020 and January 2021.</p>

<p><a href="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_0.png"><img alt="" height="860" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_0.png" width="1446"></a></p>

<p><a href="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_0.png" target="_blank">Click here</a> to enlarge image.</p>

<p>As evident in CoreLogic’s data, Rouse Hill had a pre-pandemic median value at $726,900, which has fallen to just $638,755. While other suburbs like Arncliffe and Hurstville have seen changes in median value at -$31,185 and -$65,019, respectively.  </p>

<p>“As more of the housing market is caught in a broad-based upswing, first home buyers could face more challenges getting into the market in the year ahead”, Owen said.<br>
 </p>

<h2>Sydney units listed at or below the qualifying threshold for the FHLDS<strong> </strong>
</h2>

<p><strong>1. Beyond, Hurstville</strong><br>
Address: 93 Forest Road, Hurstville NSW 2220<br>
One-bedroom apartments (with study) from $685,000</p>

<p>[smartcode_project:default project_id=6798]</p>

<p>Developed by Fridcorp, Beyond’s one-bedroom apartments are listed below the $700,000 qualifying threshold for the first home loan deposit scheme.  </p>

<p>The Woods Bagot and DKO Architecture-designed project features sculptural architecture, multi-sensory living, oversized balconies and a 4,500sqm retail precinct anchored by Woolworths.<br>
 </p>

<p><strong>2. Bloom Arncliffe</strong><br>
Address: 213 Princes Highway, Arncliffe NSW 2205<br>
One-bedroom apartments from $595,000</p>

<p>[smartcode_project:default project_id=6201]</p>

<p>The recently completed residential precinct, Bloom Arncliffe, offers 318 apartments across seven buildings, starting from $595,000 – well below the deposit scheme’s price cap.</p>

<p>Delivered by Wingate and designed by Stephen Bowers Architects, the development includes 37 commercial spaces, a youth centre, gym and support facilities.</p>
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Recent value falls may have created an opportunity for first home buyers who want to take advantage of the first home loan deposit scheme

max.kwok_55688

The Sydney suburbs now qualifying for First Home Loan Deposit Scheme after price falls

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<p>Australia’s residential property market has shown resilience, despite the shock of the coronavirus pandemic. However, impacted “pockets” of Melbourne have seen falling median values create opportunities for buyers, said CoreLogic head of research, Eliza Owen.</p>

<p>On February 3, minister for housing Michael Sukkar announced the reissue of around 1,800 first home loan deposit scheme (FHLDS) places.</p>

<p>“Recent value falls may have created an opportunity for first home buyers, where there is a maximum purchase price cap to qualify for the scheme”, Owen said.</p>

<p>As of January 2021, there was an average of 107 suburbs observed in the capital cities with a median value at or below the qualifying threshold for the FHLDS, assuming the application is for an established property.</p>

<p>In Melbourne’s inner-region, where median values have declined an average -$33,313 between March 2020 and January 2021, unit medians that have slipped below this threshold, providing the chance for first home buyers to secure a new home.</p>

<p>Melbourne’s property price caps for established units under the scheme sits at $600,000, where suburbs like Docklands, Brunswick and South Melbourne would normally not qualify.</p>

<p>As evident in CoreLogic’s data, revealing city suburbs where the median value fell below the established property price threshold since the onset of COVID-19, Docklands had a pre-pandemic median value at $645,924, which has fallen close to $50,000. Docklands' January 2021 median values are listed at $596,486.</p>

<p><a href="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic.png"><img alt="" height="860" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic.png" width="1446"></a></p>

<p>“As noted in previous research, the Inner region of Melbourne has seen particularly severe declines in rent and property values since the onset of COVID-19”, said Owen.</p>

<p>CoreLogic attributes this to Melbourne’s historically high exposure to housing demand from overseas migrants, such as international students, which has been significantly affected by the pandemic.  </p>

<p>“As more of the housing market is caught in a broad-based upswing, first home buyers could face more challenges getting into the market in the year ahead”, Owen said.<br>
 </p>

<h2>Apartments in Melbourne listed below the qualifying threshold for the FHLDS</h2>

<p><strong>1. Folia, Doncaster</strong><br>
Address: 59 Stables Circuit, Doncaster VIC 3108<br>
Two-bedroom apartments from $580,000</p>

<p>[smartcode_project:default project_id=22584]</p>

<p>With two-bedroom apartments priced from $580,000, Folia offers architecturally-designed homes below the qualifying threshold for the first home loan deposit scheme.</p>

<p>Designed and delivered by Mirvac, boasts a curved façade, rooftop conservatory and sustainable features, including a 70kWh solar panel array.<br>
 </p>

<p><strong>2. Melbourne Quarter, Docklands</strong><br>
Address: 628 Flinders Street, Docklands VIC 3108<br>
One-bedroom apartments from $458,000</p>

<p>[smartcode_project:default project_id=3459]</p>

<p>Home buyers can enjoy a one-bedroom, one-bathroom apartment for as low as $458,000 at Lendlease’s Melbourne Quarter.</p>

<p>Designed by the award-winning Fender Katsalidis, Melbourne Quarter offers residents CBD convenience, a hotel-style lobby, concierge and exclusive access to Club MQ, three whole floors of resort-style amenities.<br>
 </p>

<p><strong>3. M-City, Clayton</strong><br>
Address: 2106 Dandenong Road, Clayton VIC 3168<br>
Two-bedroom apartments from $540,800</p>

<p>[smartcode_project:default project_id=528]</p>

<p>Schiavello’s M-City offers 460 residences across four buildings at an entry price of $371,000 for a one-bedroom, one-bathroom residence.</p>

<p>Designed by Buchan Group, the apartments boast smart design features, private balconies and resort-style amenities, including a community childcare centre, outdoor pool and tennis court.</p>
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Falling median values impacting “pockets” of Melbourne has created opportunities for first home buyers, says CoreLogic's Eliza Owen

The Melbourne suburbs now qualifying for First Home Loan Deposit Scheme after price falls

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<p>The Federal Housing minister Michael Sukkar has announced that 1800 unused First Home Loan Deposit Scheme spots would be reissued this week.</p>

<p>They date back to the early days of the federal government’s scheme in January 2020.</p>

<p>The initial 10,000 spots were granted a 90-day extension to buy their desired first home on top of their original three months after COVID lockdowns made property hunting difficult.</p>

<p>Almost 1 in 5 of those spots were left unused, a government spokesperson told Domain this week.</p>

<p>The scheme allows singles earning up to $125,000 and couples earning up to $200,000 to borrow up to 95 per cent of a property’s purchase price without having to pay lender’s mortgage insurance.</p>

<p>Properties had to be below price thresholds, ranging from $475,000 in Brisbane to $700,000 for an existing property in Sydney.</p>

<p>The third tranche last October which was restricted to new homes only has seen just 4200 of the 10,000 slots taken up.</p>
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Properties have to be below price thresholds, ranging from $475,000 in Brisbane to $700,000 for an existing property in Sydney.



1800 unused First Home Loan Deposit Scheme spots to be reissued

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<div><strong><span style="text-decoration: underline;">Deposit scheme scramble</span></strong></div>
<div> </div>
<div>As REA Group, correctly anticipated, first homebuyer numbers are getting set to rip higher.</div>
<div> </div>
<div>The Australian reports today that well over 4,000 of the 10,000 places made available for the First Home Loan Deposit Scheme (FHLDS) effective 1 July have been reserved in less than four weeks. </div>
<div> </div>
<div>The federal government is therefore considering extending the scheme reports the article:</div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-UbzA0cR-6WA/XyH56IexfKI/AAAAAAAA3Vg/y_Vif17MErcybRF0__rd7_cOqJ9loQLIQCNcBGAsYHQ/s640/FHLDS.jpg" width="640" height="78" data-original-height="96" data-original-width="772"></div>
<div> </div>
<div>The FHLDS potentially allows thousands of first homebuyers to buy using only a 5 per cent deposit. </div>
<div> </div>
<div>With all of the other grants and stamp duty exemptions being thrown in around the country, it's no surprise that first homebuyers are taking advantage of the lowest mortgage rates in history to take the plunge. </div>
<div> </div>
<div>New houses have been particularly popular for FHLDS applicants...more so than apartments and townhomes.  </div>
<div> </div>
<div>First homebuyer numbers had slowed in May, but now look set to retake decade highs.</div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-mHjeF2-0gtA/XyH7HN-IHAI/AAAAAAAA3Vw/Uk-KbiqlBWAXNtHT-v34rIm4ut-ZxGaqACNcBGAsYHQ/s640/FHB.jpg" width="640" height="362" data-original-height="806" data-original-width="1422"></div>
<div> </div>
<div>Meanwhile the New South Wales government looks set to have another crack at Build to Rent by offering land tax discounts.</div>
<div> </div>
<div>It's an overrated and misunderstood concept which rarely seems to work well.</div>
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pwargent-M4siyDbqQY

First home buyer numbers set to grow: Pete Wargent

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<p class="HPS-Normal">As announced by Prime Minister Scott Morrison during the 2019 election campaign, from 1 January 2020 eligible first home buyers will be able to enter the housing market sooner.</p>
<p class="HPS-Normal">Up to 10,000 guarantees per year will allow eligible first home buyers to purchase a home with a deposit of as little as five per cent.</p>
<p class="HPS-Normal"><span class="HPS-Normal">Applicants will be subject to a range of eligibility criteria, including taxable incomes of up to $125,000 per annum for singles and up to $200,000 per annum for couples in the previous year, they must be Australian citizens purchasing property in Australia and they must be taking out owner-occupied loans on a principal and interest basis. </span></p>
<p class="HPS-Normal"><span class="HPS-Normal">Properties purchased under the First Home Loan Deposit Scheme will be subject to regional price caps. </span></p>
<p class="HPS-Normal"><span class="HPS-Normal">Regional price caps will be set with a view to ensuring equitable access to the scheme across Australia.</span></p>
<p class="HPS-Normal"><span class="HPS-Normal">The coverage of the guarantee will be broadly consistent with parental guarantee products offered by some lenders. The guarantee will remain in place until a loan is refinanced or the outstanding loan balance falls below 80 per cent of the property purchase price—whichever comes first.</span></p>
<p class="HPS-Normal"><span class="HPS-Normal">Access to the First Home Loan Deposit Scheme will occur as part of the normal home loan application process, with limited additional effort for first home buyers being required when seeking a guaranteed loan, the </span>assistant Treasurer and Minister for Housing, Michael Sukkar said.</p>
<p class="HPS-Normal"><span class="HPS-Normal">The bill introduces amendments to the National Housing Finance and Investment Corporation Act 2018 to implement the First Home Loan Deposit Scheme and establish a new research function within the National Housing Finance and Investment Corporation.</span></p>
<p class="HPS-Normal"><span class="HPS-Normal">The bill expands the National Housing Finance and Investment Corporation's functions to enable it to provide guarantees.</span></p>
<p class="HPS-Normal"><span class="HPS-Normal">Sucker noted based on median household income and a 15 per cent saving rate (on before-tax income), it takes approximately eight years to save a 20 per cent deposit on a median priced home. </span></p>
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j.ballantyne1990-6AQqhLzZaK

How the First Home Loan Deposit Scheme guarantee will work 

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<p>The extension of the First Home Loan Deposit scheme was confirmed in last night’s federal Budget with new property price caps.</p>
<p>The expanded scheme, initially announced on Saturday, will allow an extra 10,000 first-home buyers this financial year.</p>
<div class="in-content-ad">
<p>“This builds on the 20,000 first home buyers we are helping to purchase a home this year,” Treasurer Josh Frydenberg said on Tuesday night.</p>
<div class="in-content-ad">
<div id="adspot-1x1-pos-5" class="ad" data-google-query-id="CKSS6u_eoOwCFVAT1QodLR4FjA">
<div id="google_ads_iframe_//31694718/domain.com.au/news_0__container__"><iframe title="3rd party ad content" name="google_ads_iframe_//31694718/domain.com.au/news_0" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" width="1" height="1" data-google-container-id="1" data-load-complete="true" data-integralas-id-d0adcd36-d763-a453-eed1-bdf01d142228=""></iframe></div>
</div>
</div>
<div class="in-content-ad">
<div id="adspot-1x1_300x250-pos-2" class="ad">The scheme enables first-home buyers to get into the market with a deposit as low as 5 per cent, and avoiding lenders’ mortgage insurance, with the federal government acting as guarantor on the loans.</div>
<div class="ad"> </div>
<div class="ad">
<table style="width: 261px;">
<thead><tr>
<td colspan="3" width="261">FIRST HOME LOAN DEPOSIT SCHEME PRICE CAPS</td>
</tr></thead>
<tbody>
<tr>
<td>State/Territory</td>
<td>Capital city/regional centre</td>
<td>Rest of state</td>
</tr>
<tr>
<td>NSW</td>
<td>$950,000</td>
<td>$600,000</td>
</tr>
<tr>
<td>VIC</td>
<td>$850,000</td>
<td>$550,000</td>
</tr>
<tr>
<td>QLD</td>
<td>$650,000</td>
<td>$500,000</td>
</tr>
<tr>
<td>WA</td>
<td>$550,000</td>
<td>$400,000</td>
</tr>
<tr>
<td>SA</td>
<td>$550,000</td>
<td>$400,000</td>
</tr>
<tr>
<td>TAS</td>
<td>$550,000</td>
<td>$400,000</td>
</tr>
<tr>
<td>ACT</td>
<td>$600,000</td>
<td>N/A</td>
</tr>
<tr>
<td>NT</td>
<td>$550,000</td>
<td>N/A</td>
</tr>
</tbody>
</table>
</div>
<p><span>Source: Housing Minister and Assistant Treasurer</span> </p>
<p>Initially Sydney first-home buyers wanting to buy needed to buy properties costing less than $700,000 with buyers in most of the rest of the state able to spend up to $450,000 to be eligible to buy under the scheme.</p>
<p>It was initially $600,000 for Melbourne buyers, $500,000 in the ACT and $475,000 for Brisbane buyers. </p>
<p>But the <span>Real Estate Institute of Australia president Adrian Kelly said t<span>he First Home Loan Deposit Scheme should be extended to all eligible buyers of all homes, not just new builds.</span></span></p>
<p><span><span>"<span>Budget 2020 was an opportunity lost in helping more Australian's into their first homes," Kelly said.</span></span></span></p>
<p><span><span><span>HIA Managing Director Graham Wolfe said b</span></span></span>y increasing the number of people eligible for the First Home Loan Deposit Scheme by 10,000, focusing on new home builds, and raising the price thresholds, that the Government had "opened the door to a larger group of first home buyers." </p>
<p><span><span><span>“An increase in the number of people that can apply for a place in the First Home Loan Deposit Scheme if they buy or build a new home and the $1.2 billion injection into the Supporting Apprentices and Trainees wage subsidy are major cornerstones in supporting jobs across the residential building industry," Wolfe said.</span></span></span></p>
<p> </p>
<p>The national estate agency Ray White welcomed the expanded First Home Loan Deposit Scheme indicating it would boost apartment sales along with detached housing.</p>
<p><span>“Unlike the established market, apartment sales have been difficult this year, so this is a very welcome boost for this sector</span>,” Ray White group managing director Dan White said.</p>
<p><span>“It will give first home owners a much better opportunity to get into new property which often focuses on inner city areas at affordable prices, appealing to a younger demographic.  </span></p>
<p><span>"Importantly, it will rebuild developer confidence to commence construction of apartment projects.”</span></p>
<p><span>The </span>UDIA national president Simon Basheer said the property industry "can and must play a central role" in powering the nation’s economic revival – generating jobs, wages and activity up and down supply chains.</p>
<div class="page" title="Page 1">
<div class="layoutArea">
<div class="column">
<p><span>“Housing and construction contribute 750,000 direct and indirect jobs to the nation, so it is well placed to fill the gap caused by border restrictions and slower population growth due to current immigration levels.</span></p>
<p><span>“UDIA applauds the decision to release a new tranche of 10,000 places under the First Home Loan Deposit Scheme that are dedicated to new housing construction.</span></p>
<p><span>“The addition of these places – as well as the adjustment of price caps to better reflect median house prices across our capital cities – will give the industry a shot in the arm and boost employment.</span></p>
<p><span>“Importantly, the scheme can work in tandem with the </span><span>HomeBuilder </span><span>initiative, and we hope the Government keeps an open mind on its extension as well ahead of the end of the year.</span></p>
<p><span>“Research commissioned by UDIA shows the fall in net overseas migration will result in an average per annum reduction of approximately 50,000 homes per year for the next 5 years.</span></p>
<p><span>“Efforts to tap domestic demand and keep jobs flowing across the housing construction sector will be essential to maintaining economic momentum until net overseas migration returns to more sustainable levels," Basheer said.</span></p>
</div>
</div>
</div>
<p>The Urban Taskforce also welcomed the extended First Home Loan Deposit Scheme, but said more could be done while seeking an expansion of the HomeBuilder program too.</p>
<p><span>"Urban Taskforce re-iterates our call for changes to the HomeBuilder criteria," Urban Taskforce chief executive Tom Forrest said.</span></p>
<p><span>"Just as thresholds were adjusted state by state for the First Home Loan Deposit Scheme to include different thresholds for capital cities and areas outside each capital, the same thresholds should be applied to HomeBuilder. </span></p>
<p><span>"Greater Sydney, including Newcastle, should have apply to a Homebuilder threshold purchase price of $950,000, and the timeframes should be extended by a further 18 months to make homebuilder relevant to apartments (which take longer to build)."</span></p>
</div>
</div>
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jchancellor-FAypfDUnLy

New price caps unveiled in extension of the First Home Loan Low Deposit scheme

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<p>New data shows the Morrison Government’s successful First Home Loan Deposit Scheme has helped get Australians into a home of their own up to four years earlier than they had planned.</p>
<p>The National Housing Finance and Investment Corporation (NHFIC) Trend and Insight Report, shows the Scheme had an outstanding first year.</p>
<p>The Report also found the Scheme supported one in eight of all first home buyers who purchased a home in Australia between March and June 2020.</p>
<p>Australia’s essential workers secured one in six of the Scheme’s guarantees and around three quarters of guaranteed loans were taken up by Australians aged between 18 and 34 years of age.</p>
<p>Guaranteed loans were secured in all parts of the nation with major cities attracting 62.3 per cent of buyers under the Scheme, while 37.7 per cent purchased in regional areas.</p>
<p>The largest amount of applications for guaranteed loans, 46.1 per cent, were made through mortgage brokers.</p>
<p>Almost 70 per cent of buyers using the Scheme purchased a detached house, with 25 per cent buying an apartment and five per cent purchasing a townhouse.</p>
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One in eight FHB homes bought with First Home Loan Deposit scheme

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<p>There's been a rush of applicants from first home buyers seeking to secure a spot to buy with a deposit of as little as 5 percent under the new Federal Government home loan deposit guarantee scheme.</p>
<p>That's not surprising, but there are plenty of spots still available.</p>
<p>Especially as 5000 spots became available on February 1 with the 25 non-bank and regional lenders including the Bendigo Bank, Australian Military Bank and Community First Credit Union. </p>
<p>The number of applicants across Australia is capped at 10,000 every financial year, but as the initiative began on January 1, there will be the double opportunity during 2020, ie from July 1.</p>
<p>It has been reported that most of the opening 3000 spots have been taken, but many of these are really pencilled in reservations that won't ever see an actual purchase.</p>
<p>Those intending buyers already on the list with lenders will next need to get through the still onerous bank approval process.</p>
<p>And then they will need to find a suitably-price property within the ensuing 90 days.</p>
<p>That might just be difficult as it appears fresh 2020 listings are only slowing coming to market.</p>
<p>Even with 20,000 participants in 2020, it was always likely to be a squeeze as some 80,000 other <span class="il">FHBs</span> will still need to find their own borrowing arrangements.</p>
<p>Sydney <span class="il">FHBs</span> will need to find properties costing less than $700,000 under the scheme.</p>
<p>The same price cap will also apply to NSW regional centres with a population of 250,000 plus, namely Newcastle, Lake Macquarie and the Illawarra around Wollongong.</p>
<p>The scheme to be known officially as the First Home Loan Deposit Scheme (FHLDS) will available only to <span class="il">FHBs</span> with an annual income of up to $125,000 or couples with a combined $200,000 per year who haven't saved the standard 20 percent deposit.</p>
<p>Prime Minister Scott Morrison and Treasurer John Frydenberg announced the scheme just days before the May 2019 election, when the property market was in a downturn.</p>
<p>The Prime Minister expressed concern the time it took to save a home deposit was one of the barriers to home ownership.</p>
<p>There is the real risk that competitive tension will see prices rise as <span class="il">FHBs</span> expeditiously seek out their first step on the property ladder.</p>
<p>The National Housing Finance and Investment Corporation (NHFIC) is overseeing the scheme in a vastly different property market, at least in Sydney and Melbourne.</p>
<p>It needs to wise to market shifts and to smartly recommend adjustments so that its policy objectives are met.</p>
<p><a href="http://ratecity.com.au/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://RateCity.com.au&amp;source=gmail&amp;ust=1580769830838000&amp;usg=AFQjCNFQhd3z8C9Xv2hFiUVsHTs_sYcZXA">RateCity.com.au</a> recently calculated a person buying a $500,000 property with a 5 per cent deposit instead of a 20 per cent deposit would need $75,000 less initially, but with a larger loan, their monthly mortgage repayments would be $329 extra a month and they would pay $43,000 in extra interest over 30 years, based on the rate of 3.32 per cent.</p>
<p>Corelogic researcher Eliza Owen noted paying more interest on a low deposit loan makes more sense "if property values are going up.</p>
<p>"By accessing a property sooner, the asset has longer to accumulate capital growth that may outweigh the higher level of interest paid." </p>
<p>Sally Tindall, research director at RateCity, says buyers need to "go in with eyes wide open because it’s peppered with potential drawbacks."</p>
<p>Meanwhile ME Bank’s latest sentiment report, conducted last month, shows <span class="il">FHBs</span>’ hopes haven’t been crushed by rising prices, with more than half planning to buy this year, compared to the 38 percent who were hopeful in late 2019.</p>
<p><em>This article first appeared in</em> The Daily Telegraph.</p>
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