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First home buyers still looking for 100% home loans
Released 31 October 2011

Potential first time buyers continue to seek 100 per cent home loans even though banks no longer offer them, says leading mortgage broker Loan Market.    

Loan Market Chief Operating Officer Dean Rushton said seven per cent of the brokerage’s total enquiries during October 2011 have come from people wanting no deposit home loans.

“There remains strong interest from people who want to enter the real estate market and borrow the entire cost of the property,” Mr Rushton said.

“But the modern day lending reality is that if you want to obtain housing finance you have to save for a deposit.

“Lending restrictions require genuine savings contributions of around five per cent towards the property purchase.

“A deposit of this size demonstrates to the lender that you have the capacity to save money and budget.

“It also gets you started on the front foot in terms of already having some of the market value of your property paid off.”

Mr Rushton said would-be buyers were best off to develop a savings plan early to build a home deposit.

“Borrowers should consider saving for as large a deposit as possible as both interest and Lenders Mortgage Insurance (LMI) costs increase substantially the more you borrow,” he said.

“The discipline of saving is no different from meeting a fortnightly or monthly mortgage payment.” 

Source: Loan Market