The Two Major Bank Policy Shifts Which Could Get You Your New Home Sooner
In the past few weeks, there have been two key changes that have rolled through the policy books of the major banks, which mean First Home Buyers now have many more options for getting into their first property.
CHANGE No.1 – REDUCED SERVICEABILITY RATE
What is it?
Put simply, the banks previously assessed how much you could borrow as if you were paying interest rates on your mortgage of 7.25% or higher. This gave them protection if rates were increased in the future. With the policy changes, they now assess how much you can borrow on an interest rate 5.5% or higher.
What does it mean?
What it means is that while your income and debts and living expenses will be the same, the banks will offer to lend you up to $100k more on your home loan. For people with a number of kids or significant personal loans which are hindering there ability to get a loan, this might just make it possible.
How do I take advantage!?
Give us a call or talk to your trusted finance specialist. When looking at finance there are always two questions, how much can I borrow, and how much can I afford to borrow, given short and long term goals. We don’t advocate over-extending yourself, but if this change means that you can now get into your first property, and the repayments are just as much as your rent, take advantage now!
CHANGE No.2 – INTEREST RATE CUTS
What is it?
I’m sure everyone is aware that rates have been cut, but it is important to know when these have actually been implemented across the bank offerings. Well that time is now.
What does it mean for me?
On a $450,000 loan, a .25 rate cut will mean a saving of $15 / week or $65 / month. It means that you can pay your mortgage off quicker and ultimately pay less interest. We are seeing 3 years fixed rates at 3.4% or lower, and some rate offers even sneaking below the 3% mark at 2.99%!
How can I take advantage?
Get in touch now, or speak to your trusted advisor in this space.