First Home Buyer Scheme [95% NO LMI/5% DEPOSIT] Australia 2019

First Home Buyer Scheme [95% NO LMI/5% DEPOSIT] Australia 2019. 5 Deposit Mortgages - 0131 467-0996

First Home Buyer Scheme [95% NO LMI/5% DEPOSIT] Australia 2019 video duration 6 Minute(s) 5 Second(s), published by Mortgage Broker Brisbane - Hunter Galloway on 16 05 2019 - 22:18:50.

Scott Morrison & Bill Shorten both announced a new First Home Buyer Scheme which will allow 95% loans without lenders mortgage insurance
In other words With less than a week until the Australian federal election, Prime Minister Scott Morrison decided to unveil some new housing policy on Sunday titled, “First .

5 Deposit Mortgages - when people ask about these, they're talking about 95% mortgages
with a 5% deposit
Do 5 Deposit Mortgages or, to be accurate, 95% . 5 Deposit Mortgages - when people ask about these, they're talking about 95% mortgages
with a 5% deposit
Do 5 Deposit Mortgages or, to be accurate, 95% .

Scott Morrison & Bill Shorten both announced a new First Home Buyer Scheme which will allow 95% loans without lenders mortgage insurance. In other words, from January 2020 you'll be able to buy a home with a 5% deposit in Australia! So what are the catches?

We go through all the pros and cons in this video.

What is LMI? https://www.youtube.com/watch?v=-vw_oRFZ3JA
Or try our LMI Calculator to see what you'll save https://www.huntergalloway.com.au/lmi-calculator/

The Coalition has promised to help 10,000 first homebuyers into the market by topping up their 5% deposits with a government guarantee for 15% of the loan.

Scott Morrison insists the policy is not “free money” but experts have already warned it could be ineffective at lifting home ownership rates or counterproductive by bidding up prices.

Labor has already committed to match it so we’d best get across the policy which will be introduced in some form whoever wins the election.

Single people earning up to $125,000 or couples earning up to $200,000 will be eligible for the first-home loan deposit scheme if they have saved 5% of the value of the home.

The government will set aside $500m of equity through the National HousingFinance and Investment Corporation to guarantee loans up to a value of 20% of the home. Buyers won’t need to have a full 20% deposit and will save around $10,000 by not having to pay lenders mortgage insurance.

The scheme is limited to 10,000 first homebuyers, roughly one-in-10 of the 110,000
Australians who bought their first home in 2018.

The government has suggested there will be regional caps on the value of homes for which it will guarantee a deposit.

How long does the guarantee last?

Once the first homebuyer has borrowed 95% of the value of the house, the government guarantee lasts until the homeowner refinances.
Is it risky for the government?

Scott Morrison told the Liberal party launch on Sunday the policy is not “free money” and lenders “will still do all the normal checks on the borrowers to make sure they can meet their repayments”.
Grattan Institute housing expert Brendan Coates told Guardian Australia in the event of a default the bank would need to get its money before the government otherwise “they can’t treat it as a government-guaranteed deposit”.
Coates suggested the government is “opening itself up to quite a lot of risk, especially in a falling market”.
Morrison anticipated this objection by arguing that owners refinance “when the equity increases – which it would under a Liberal National government” – which is brave because house prices are already falling and are expected to fall further in Sydney and Melbourne.

If the measure is more first homebuyers entering the market, Coates said the policy is “either going to be ineffective or counterproductive”.

Because it is limited to 10,000 homebuyers “it’s not going to affect home ownership rates” but rather bring forward the purchases of a “pretty small” group of people who can afford a home anyway but are just shy of the 20% deposit, he said. The real hurdle to entering the market is that lenders have to be confident buyers could afford a mortgage with 7% interest rates.

If the guarantee does induce people who wouldn’t otherwise be able to afford a home to enter the market, then “it will impact prices”, Coates said. “Then it starts to look more like a first homebuyers grant, it bids up prices and the vendors win.”
Morrison said the policy will “make a big difference, cutting the time taken to save for a deposit by at least half and more”.
If the aim is to cut the time to put together a deposit, it may be a success. RateCity, an interest rate comparison site, has calculated the scheme could slash the time taken to save for a deposit by more than five years for people living in Sydney, four years in Melbourne and three years in Brisbane.
But RateCity research director Sally Tindall said a 30-year mortgage with a “wafer-thin deposit” is a recipe to pay “thousands more in interest to the bank over the life of the loan”.

Labor says it will match Coalition's deposit scheme for first homebuyers

According to RateCity’s calculations, buying a $500,000 property with a 5% deposit instead of 20% will cost an extra $58,774 over the life of a 30-year loan.
“Apra [Australian Prudential Regulation Authority] has spent the last four years telling the banks to be cautious of lending to Australians with low deposits,” Tindall said. “Now the major political parties are actively encouraging it.”
What are the politics?

Before the 2016 election Labor proposed tax changes to tip the balance of the housing market away from investors and towards first homebuyers.
The Coalition ruled out following Labor’s proposal to phase out negative gearing for existing properties and to halve the capital gains tax discount. It argued that Labor’s policy will cause rents to rise and house prices to fall, despite the treasury advising the price impact will be “relatively modest”.