St.George kick-starts Australian dream for first home buyers
13 July 2020
With Aussies more motivated to save for a home, a new home loan option from St.George may now hold the key to home ownership dreams.
St.George is helping first home buyers get a foot in the door sooner with a new home loan option for Aussies looking to buy their first place to call home.
Effective Monday 13 July 2020, St.George has reduced Lenders Mortgage Insurance (LMI) to only $1.00 for eligible first home buyers with a Loan to Value Ratio (LVR) up to 85%.
The move paves the way for first home buyers to buy their first home by saving a 15% deposit, instead of the traditional 20% of the value of a property purchase price.
Saving for a deposit is one of the biggest barriers to home ownership for first home buyers, with St.George research revealing the entire process of saving and planning can take almost ten years.
Generally, a family home with a property value of $650,000 means a buyer would also be looking at a one-off payment of more than $6,000 for the cost of LMI if they had less than a 20% deposit.
The 2020 St.George Home Buying Report found two thirds (64%) of first home buyers expect to face financial problems leading up to their first property purchase, including the most common difficulty, building up a deposit (50%).
Close to half (48%) are saving more in order to buy in their desired area, and nearly three in every 10 first home buyers are struggling to find a property that suits their needs.
St.George General Manager, Ross Miller, said “Our research shows one of the biggest hurdles for first home buyers to overcome is the time it takes to save for a deposit, despite being in the financial position to make home loan repayments.
“We are seeing many pain points experienced along that savings journey, including giving up holidays, reducing entertainment expenses, having to move back home with parents, moving in with friends or even leaning on family members to help top-up savings.
“By reducing the expense of Lenders Mortgage Insurance, first time purchasers may be able to afford a property that meets their needs sooner and save thousands of dollars.”
St.George research showed one in every 10 Australians looking to buy a home are doing so for the first time and that the COVID-19 pandemic has made one third of Australians want to save for that goal quicker.
“Australians have spent more time at home than ever before during the COVID-19 restrictions, and we are seeing a bigger trend in how the nation is re-evaluating their current living situation. For example, three quarters of people would now prefer to live in a house over an apartment,” Mr Miller said.
“First home buyers are calling for new ways to achieve their home ownership dreams sooner, and this option is designed to help make that goal within closer reach, particularly with the added benefit of a record low interest rate environment.”
The St.George First Home Buyer home loan offer in detail
The St.George First Home Buyer home loan offer1 means eligible customers can put forward a minimum deposit of 15% of the value of the property (LVR2 up to 85% at the time of approval) and St.George will reduce the cost of Lenders Mortgage Insurance to just $1.00 – which can save thousands.
The offer is available for owner occupier first home loans on principal and interest repayments, with a maximum loan size of $850,000 (up to a maximum property value of $1,000,000).
For more information, customers can speak to an accredited broker or visit our website.
St.George Home Buying Research - Key Findings:
- One in every 10 Australians looking to buy a home are doing so for the first time.
- Two thirds (64%) of Australian first home buyers expect to face financial problems leading up to their first property purchase, most commonly, difficulty building up a deposit (50%).
- The entire process of saving and planning for a first home takes almost ten years.
- Close to half (48%) are saving more to buy in their desired area.
- Nearly three in every 10 first home buyers are struggling with not finding a property that suits their needs.
- The COVID-19 pandemic has made one third of Australians want to save for their first home quicker.
- Post COVID-19, three quarters (74%) of Australians would prefer to live in a house than an apartment.
First Home Buyer Glossary
- Deposit: You generally require 20% deposit of property value to avoid paying Lenders Mortgage Insurance.
- Loan-to Value-Ratio: Loan-to-value ratio (LVR) is a common home loan term and stands for the initial loan-to-value ratio at loan approval. LVR is the amount of your loan compared to the bank’s valuation of your property offered to secure your loan expressed as a percentage. It’s used by lenders to assess the risk of a home loan.
- Lenders Mortgage Insurance: LMI is generally needed when you have less than 20% deposit. This is an insurance cover that protects the bank from encountering any loss if you can’t repay your home loan. It’s a one-off payment based on the amount borrowed and the size of your deposit.
- Owner Occupier: The loan purpose whereby the property you live in.
- Principal & Interest Repayments: When you pay principal and interest repayments, each repayment goes towards paying off both the amount borrowed to buy the property (the ‘principal’) as well as covering the interest. By the end of the loan term (which can be up to 30 years), both the amount borrowed and the total amount of interest owed will be repaid.
About the St.George Research:
The 2020 St.George Home Buying Survey was commissioned by St.George and conducted by Lonergan Research in accordance with the ISO 20252 standard. Lonergan Research surveyed 1483 Australians aged 18+.
The St.George Covid-19 Home Buying research was commissioned by St. George and conducted by Lonergan Research in accordance with the ISO 20252 standard. Lonergan Research surveyed 1,017 Australians aged 18+.