Battlers in limbo despite home loan help
It is feared the most disadvantaged of Australia's aspiring homeowners will still struggle to secure loans despite the incoming federal government's promised equity contribution offer.
Labor's centrepiece cost-of-living policy announced during the election, its Help to Buy scheme, aims to slash the cost of buying a new dwelling by 40 per cent and an existing one by 30 per cent.
It will mean smaller deposits, smaller mortgages and smaller repayments for up to 10,000 applicants.
However, Zippy Financial founder and principal broker Louisa Sanghera says low-income borrowers may still find it hard to qualify if relying on a 2 per cent deposit, particularly when existing schemes requiring similar minimal instalments have proved mostly unsuccessful.
"Saving a 2 per cent deposit won't be enough for most low- to middle-income borrowers to secure finance," she said.
"Especially when their mortgage might still be $650,000 after the government's equity stake, depending on their location."
That said, the threshold for battlers to succeed may not be permanently beyond reach.
Ms Sanghera says the National Housing Finance and Investment Corporation's existing first-home loan scheme requiring applicants to put down 5 per cent has a nine in 10 success rate.
It might be cold comfort for someone desperate to secure a loan for an $800,000 property with $16,000 up front instead of $40,000, but it's at least something.
Usually, first-home buyers without government help and less than a 20 per cent deposit need to pay lenders' mortgage insurance.
Ms Sanghera says it is vital prospective buyers get expert advice on where and what to buy, given they will eventually need to pay back the government's equity stake, including capital growth.
"Location and asset selection is always paramount," she said.
"But it is even more vital when fundamentally they will have to relinquish a significant percentage of equity and value gain if they sell in the future, which may actually prevent them upgrading at all."
A Finder survey of 1000 Australians reveals 41 per cent hope the new federal government will address housing affordability, about the same as those wanting an improved healthcare system, and even more than those seeking climate change action.