The Commonwealth Bank recently announced that home buyers will have to come up with at least 3% of the purchase price for a home as a down payment on their mortgage out of their own pocket. This would be in addition to any money that is received from the First home Owners Grant or any other available government grants.
First Home Owners Grant Is Not Enough Anymore
The First Home Owners Grant has been helping first time home buyers to be able to get into a home easier by using the $14,000 as a deposit and not requiring them to have to come up with any money on their own. But this is all set to change now which could make it harder for a first time home buyer to get into a new home.
Banks Are Leary And Nervous
One of the reasons for the change in policy is due to the fact that people are more apt to stick with a home if they are financially vested in it. If someone gets into a property and has none of their own money into the house it is much easier to walk away when times get hard. The banks want to make sure that they are not losing money to new homeowners that are not committed to repaying their loans and upholding their end of contractual agreements. There is also concern that if there are future inflation and interest rates hikes it will make repayment of loans even harder.
3% Down Minimum Requirement
Australians who are looking at getting into a new home will now be required to put at least 3% of the purchase price down out of their own pocket. The banks are hoping that this will encourage home owners to stick with it, even if times get tough.
Property Options Australia
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Hi Sean,
I think the first homeowners grant has helped a lot of people get into their own homes. But, I still think it’s important to be able to make a downpayment and have some money in reserve in case of emergency.
I think when you buy a house with no money left over if something goes wrong; you’re asking for trouble.
Since the global financial crisis bamks have become very cautious and have tightened their lending criterea. Apart from needing more of a deposit, the lvr has aso increased.