Home News Low deposit home loans enable first home buyers to settle in Melbourne

Low deposit home loans enable first home buyers to settle in Melbourne

Font size :
Despite the unaffordability of the Australian housing market, low-deposit loans for house and land packages have enabled many first home buyers to secure large properties in Melbourne. These buyers only need to pay the small deposit of $2,000, add their $10,000 first home owner grant, and take out a personal loan to cover the gap between that amount and the five per cent deposit.

Building giant Metricon is one of the few builders offering this kind of arrangement. According to Peter Langfelder, Metricon's general manager of Victorian housing, this has opened more doors to home ownership. However, he was quick to point out that customers faced rigorous checks to qualify for the home loan.

"It is a responsible loan. We're not putting people into undue risks," Langfelder said. "It's normal lending under the same criteria as any mortgage."

However, experts have warned these first home buyers that they could face serious financial complications with this arrangement, with figures showing some Melbourne suburbs having a high mortgage delinquency rate. In fact, they are among the worst in the country.

"By saving only $2,000, and not going through the exercise of saving a more substantial deposit, they're paying for it longer term in the mortgage insurance and the unsecured debt," said buyer's advocate Cake Bakos.

"If you can't come up with the gap, you'll lose your deposit and the builder or developer can go after you," added Mario Borg, a financial strategist in Melbourne.

Experts advised first homeowners to consider their future financial situations as there are significant hidden costs in buying larger houses, such as higher heating fees and transport costs.
 

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

Many millennials are relying on an inheritance to buy homes Many millennials are relying on an inheritance to buy homes

Lawyers are seeing cases where disputes over inheritance have created tensions within families Read more

Gen Y homeowners fearful of interest rate rises Gen Y homeowners fearful of interest rate rises Many are worried rises will negatively impact their cost of living expenses, according to a new survey ... Read more

Young Sydneysiders are less keen on homeownership Young Sydneysiders are less keen on homeownership Many would rather ‘rentvest’ than be tied down to a costly owner-occupier mortgage, according to new studies ... Read more

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate The sprawling redevelopment aims to boost the supply of affordable housing in Sydney ... Read more

More mortgage news and articles

Sponsored Links

Wednesday, Aug 23, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords