More lenders sign up to low deposit first home buyer scheme

First home buyers with a small deposit now have an even wider range of lenders to choose from. We reveal the latest banks to join the 5% deposit scheme that’s helping more buyers get into the market sooner.

First home buyers have just received an early Christmas gift, of sorts, with an uptick in the number of lenders that have signed up to the Home Guarantee Scheme (HGS).

Three Westpac brands, St.George, Bank of Melbourne and BankSA, have added their names to the list of lenders available to first home buyers under the HGS.

If you’re not familiar with the HGS, it gives first home buyers an opportunity to buy a place of their own with as little as a 5% deposit (and no lenders mortgage insurance) through the First Home Guarantee or Regional First Home Buyer Guarantee.

First home buyers aren’t the only ones to benefit. The HGS also includes the Family Home Guarantee, which allows solo parents to buy a home with just a 2% deposit.

More competition is good news for home loan rates

According to Housing Australia, which runs the HGS, first home buyers can now choose from 33 lenders participating in the scheme.

This includes most of the big banks (ANZ has not signed up) plus a generous variety of small banks, credit unions and non-bank lenders.

The extra sweetener is that more lenders can boost competition, which potentially encourages banks to keep their interest rates low for first home buyers.

Buying with a 5% deposit helps get you into the market sooner

Saving a deposit is often the key barrier for first home buyers. And when home prices and cost of living are rising, it can seem like the goal posts are constantly moving out of reach.

The beauty of the HGS is that it lets first home buyers jump into the property market about four years earlier (on average) than they normally would.

So, it’s no surprise that last financial year one-in-three first home buyers purchased with the help of the HGS.

Better yet, new data from Housing Australia shows that first buyers who have tapped into the scheme are now sitting on $82,000 in home equity, on average.

It’s a great result, especially when you consider that the average first home deposit across the scheme was just $35,200 in 2020, rising to $36,400 in mid-2023.

Compare that to the average deposit of $159,000 across the broader first-home buyer market, and it’s easy to see how the 5% deposit scheme gives first-home buyers a valuable leg-up into the market sooner.

How to choose the right loan for you?

With more than 40 lenders offering 5% deposit home loans under the HGS, the challenge can be choosing the loan and lender that’s right for your needs (or finding one that will take you on if your application is a bit touch and go, or if you’ve just started your own business in recent years).

The simple solution is to give us a call.

We can explain whether you’re eligible for the low-deposit scheme, and answer any questions you may have.

We’ll also take the time to understand your needs, so you can be confident that the lenders and loan products we put forward to you are a good fit.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How to manage your home loan over Christmas

It may be called the silly season but a few smart strategies could help you enjoy the festive season this year without missing a beat on your home loan. Check out our tips to share the Christmas cheer this year without breaking the bank.

Store shelves are starting to be lined with tinsel, ‘Santa stop here’ signs are popping up around the neighbourhood, and chances are you’re beginning to hum a few bars of Jingle Bells.

Yes, Christmas is just around the corner, and now’s the time to plan for what can be a pricey time of year.

After 13 rate hikes in close succession, plenty of homeowners are feeling the squeeze of higher home loan repayments.

The good news is that you (hopefully) won’t have to cancel Christmas this year. Below are three clever hacks that could help you manage your mortgage over the festive season.

1. Follow Santa’s lead – make a list (or two)

Plan ahead by listing all the fixed expenses you’ll face in December such as utilities, your home loan, car loan, and credit card repayments, as well as less frequent bills such as council rates that may fall due before Christmas.

Add up the total to know how much you need to set aside. It’s a good idea to try and prioritise these bills over seasonal spending.

Next, draft up a Christmas spending budget that allocates money to gifts, food, drinks and decorations.

Finetune your budget based on your ability to pay, bearing in mind the upcoming costs you identified in the bill list.

If things are looking tight this year, consider opting for Secret Santa instead of everyone buying everyone a present.

It can help make the giving experience more personal and is definitely gentler on the hip pocket.

Websites like elfster.com can help keep it anonymous and straightforward for everyone.

2. Plan for how you’ll pay

It can be tempting to pay for Christmas purchases with a credit card or buy now, pay later. But these options can just mean kicking the can down the road until January when payments fall due.

It’s also worth noting that late payments on either option could affect your credit score for any future home loan applications.

So where possible, consider reaching for your debit card for festive purchases. It’s hard to get into too much trouble when you pay using your own money.

3. Ask your lender for a gift

Christmas is the season of giving, so why don’t we hit up your lender for the gift of a lower interest rate?

Reserve Bank data shows there is still a gap between the rates on new versus established loans.

If you took out your loan through us, get in touch and we can either reach out to your lender on your behalf for a discount or, if they don’t come to the party, help you explore your refinancing options with another lender.

Don’t let Christmas spending ruin your home loan plans for 2024

It’s easy to get swept up in seasonal good cheer. But it can sometimes be important not to get too carried away with Christmas spending.

If you plan to refinance your home loan or purchase a house in 2024, a lender will likely look at your spending patterns over the past few months.

Hamming up your purchases in December can bump up your average living costs, and if you go way over the top, potentially see you knocked back for a new loan in the new year.

Want more tips to manage your mortgage over the holiday season? Call us today for more festive saving strategies.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The big stretch: should you extend your loan term?

If the November rate hike will seriously stretch your finances, one potential solution may be to extend your loan term. It can ease the hip pocket pain by lowering monthly repayments. But taking more time to pay off your mortgage can come with hidden downsides. Here’s what to weigh up.

Will the RBA’s latest 0.25% cash rate rise squeeze you financially? (not to mention the other 12 rate hikes!)

The majority of lenders lost no time increasing their variable home loan rates following the Reserve Bank of Australia’s 0.25% Melbourne Cup Day rate rise.

According to Mozo, the 13th rate hike since May 2022 has pushed up the average variable rate to 6.62%.

What does that mean in dollars and cents?

On a $500,000 variable rate home loan payable over 25 years, the latest 0.25% rate hike can see monthly repayments jump by $78.

For homeowners who didn’t have much fat left to cut from their budget, those extra dollars can be hard to find.

One potential strategy that may help to lower repayments is to stretch out your loan term.

How extending your term can reduce repayments

If you have a 25-year loan, your lender may give you the option to extend for up to five more years, possibly pushing out the term to 30 years.

If you get the green light, this kind of reset can significantly lower your monthly repayments.

On the $500,000 mortgage we looked at earlier, moving from a 25-year loan to a 30-year loan could cut monthly repayments by around $214 – even after allowing for the November rate hike.

The hidden cost of a longer term

There’s a lot to love about the prospect of slashing a couple of hundred bucks off your loan repayments each month, especially as we head into the festive season.

But pushing out your loan term can come with a hidden cost.

Taking longer to pay down your loan means you’re also paying interest for longer. And while your repayments can decrease, the long-term interest cost can skyrocket.

Stretching a $500,000 loan from 25 to 30 years could mean paying a whopping $128,000 more in total interest.

It’s worth keeping in mind though that those extra interest repayments aren’t a given.

You may be able to close the gap and cut down the interest cost by either making extra repayments in the future, loading up an offset account, or paying off the loan early (if, for example, you receive a lump sum inheritance).

So the upshot is that stretching your loan term can be a short-term fix now, but you’ll have to weigh up the costs against the benefits, not to mention whether you think you’ll be in a better financial position later down the track to pay down the loan quicker (and thus reduce the interest payments).

Other ways we can help

Along with exploring extending the length of your loan, we could also help you look into other solutions to ease the pain of higher rates.

Options that may be available with your lender include:

– temporarily lowering your loan repayments;
– deferring repayments for a while; or
– shifting you to interest-only payments for a set period.

The common thread is that the earlier you reach out for assistance, the sooner we may be able to help you get some financial relief.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

RBA increases the cash rate by 25 basis points, up to 4.35%

The Reserve Bank of Australia (RBA) has increased the official cash rate by 25 basis points, taking it to 4.35%. So just how much will this year’s Melbourne Cup day rate hike increase your monthly repayments?

Some more tough news for mortgage holders around the country today.

Despite the official cash rate being on hold since June (and many hoping it would stay that way), the RBA has decided to press ahead with a second consecutive Melbourne Cup day rate rise in an attempt to rein in inflation.

This means we’ve now had 13 hikes rise in 18 months since 1 May 2022, and it takes the official cash rate to its highest level since November 2011.

It also happens to be the first rate hike under new RBA Governor Michele Bullock, who commenced in the role in September.

So why did the RBA raise the cash rate?

Governor Bullock said while inflation in Australia had passed its peak, it was still too high and was proving more persistent than expected a few months ago.

“While goods price inflation has eased further, the prices of many services are continuing to rise briskly,” she said.

“While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected.”

Governor Bullock added the RBA Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe.

“If high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment,” she said.

How much could this latest hike increase your mortgage repayments?

If you’re on a variable-rate home loan, the banks will likely be increasing the interest rate on it very shortly.

For an owner-occupier with a 25-year loan of $500,000 paying principal and interest, this month’s 25 basis point increase means your monthly repayments could go up by about $76 a month.

That’s an extra $1,211 a month on your mortgage compared to 1 May 2022.

If you have a $750,000 loan, repayments will likely increase by about $114 a month, up $1,816 from 1 May 2022.

Meanwhile, a $1 million loan will increase by about $152 a month, up about $2,422 from 1 May 2022.

Need help reining in your mortgage? Get in touch

Are you feeling the pinch? You’re not alone. Many households around the country are feeling the effects of 14 rate hikes in 18 months.

There are also lots of people on fixed-rate home loans wondering what options will be available to them once their fixed-rate period ends.

Some options we can help you explore include refinancing (which could mean increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a cash buffer in an offset account.

So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage your mortgage moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Brokers help settle a record 7-in-10 new mortgages

Mortgage brokers have notched up a new personal best, with seven out of every 10 new mortgages settled thanks to their help! It’s a sure sign that mortgage brokers are delivering the goods when it comes to helping Australians move into their dream homes.

In the nine months to 31 March 2023 (while interest rates were rising), mortgage brokers helped settle more than 70% of all new residential home loans, according to the latest data from the MFAA.

It’s the first time ever that brokers have helped settle more than 70% of home loans over a three-month-plus period.

For context, just two years earlier brokers were helping settle between 50-60% of new home loans.

So why are more Aussie home buyers turning to mortgage brokers?

For starters, it looks like word is getting out about how much help we can provide when it comes to giving you an informed choice with your home loan.

And in this environment of higher interest rates, it’s important to be sure your home loan offers value.

With a wide network of lenders – including big banks, small banks and non-banks – brokers are well-placed to help you choose the loan that’s right for you.

It doesn’t end there, though. Here are five more reasons why Australians are turning to brokers for help.

1. Brokers do the legwork

There are hundreds of home loans to choose from. But who’s got the time to find a loan that suits your needs?

Your broker does.

Better still, your broker does a lot of the legwork, sorting the paperwork and supporting your loan application right through to settlement.

That lets you sit back, relax, and focus on moving into your new home.

2. We’re flexible

You’re busy, right? That’s why brokers offer flexible appointment times.

Want to chat after hours? No problemo.

Prefer to chat online rather than face-to-face? Can do.

It may seem like a minor benefit, but the flexibility brokers offer is a big deal when you’re flat out with work, family, or just busy house hunting.

3. Brokers provide tailored facts

Brokers provide clear details to help you make informed decisions.

From your borrowing power, to how much of a deposit you really need, and what your loan repayments will be under various scenarios, we’ll crunch the numbers based on your unique situation.

It takes the guesswork out of buying a home and lets you plan ahead.

4. No additional costs and a best interests duty

It often comes as a surprise that a broker’s home loan help comes at no cost to their clients. That’s because brokers are paid a commission by lenders.

Rest assured though that unlike the banks, we’re (happily) bound by a best interests duty that means we’ll always put your best interests first.

So while banks and digital lenders might try to tempt you with cashback offers for loan products that may not really be in your best interests (due to fees, high interest rates, and other undesirable loan terms), we’ll only ever try to match you up with lenders and loans that are in your best interests.

5. Brokers keep working for you over the long term

Chances are you’ll have your home loan for quite a few years.

We’ll be with you along the way to help make sure your home loan continues to be the right option for you, no matter how your life changes.

So call us today to see why more Australians than ever are partnering with a broker.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.