Time to get off the rental roundabout!

By Your Mortgage
First homebuyers who are looking to jump off the rental roundabout are in a perfect position to enter the market, with lenders finally beginning to relax their lending criteria as the economy strengthens.
Banks and lenders across Australia went into crisis mode following the GFC, dropping all 100% loan products from their books. Loans above 90% LVR also became very difficult to obtain, and lenders mortgage insurance (LMI) premiums for all loans above 80% went through the roof.
However, that’s all set to change now that the economy is showing solid signs of growth, says Mark Evans, local franchise owner for Mortgage Choice.
“The good news is, several lenders have begun loosening loan approval criteria,” he explains.
“In some cases this means increasing the amount they will lend to 95% of the purchase price, up from 90% earlier this year and 80% during the GFC. Borrowers who choose such lenders will require only a 5% deposit plus other possible purchase costs, such as lenders mortgage insurance and legal fees.”
Those who are interested in buying their first home should begin researching their options sooner rather than later, Evans adds, as buying activity is tipped to pick up in the new year.
“As positive sentiment grows so too will demand, which may mean now is a good time to act,” Evans says.
“What prospective first homebuyers really need to do is explore their choices carefully – both property and mortgage wise – before leaping in too quickly.”
According to the Australian Bureau of Statistics (ABS), the average first homebuyer loan size is currently $282,500. On a 95% loan, this means borrowers need to save around $14,000 for a house deposit.
When you factor in the $7,000 First Home Owner Grant (FHOG), the amount required shrinks even further to just $7,000 – and suddenly, dreams of owning your own home don’t seem so impossible.
The FHOG is administered by each state and territory and different rules and exemptions apply in each region.
For instance, in NSW a cap of $750,000 applies to the FHOG. This means that applicants who purchase or build a home that has a total value of more than $750,000 will not be eligible for the grant.
However, a stamp duty exemption of up to $17,990 is available under the First Home Plus Scheme in NSW.
To see which grants and exemptions are available to you, visit www.firsthome.gov.au.