The future of Australia will look different depending on which political party wins Saturday’s federal election.
But one thing is for sure: no matter which party emerges victorious, first-home buyers will be the winners.
The Coalition’s First Home Loan Deposit scheme, announced on Sunday and quickly matched by Labor, will mean 10,000 people earning up to $125,000 will be able to pay just a 5 per cent deposit on their first house instead of the current 20 per cent.
This would mean a big leg-up to Sydneysiders and Melbournians who now stand to have $134,550 and $108,750 shaved off their deposit, according to Finder analysis of CoreLogic figures.
Despite the chill sweeping across the national property market, Sydneysiders still pay the most for a house, with the average property costing $897,000.
However, it’s residents of Hobart – who already enjoy median house prices of $460,000, the lowest of all capital cities in Australia – that will be paying the least for their deposit.
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Under the scheme, Aussies wanting a crack at the Hobart property market will only need $23,000 – the lowest in the country – instead of $92,000.
This is followed closely by Adelaide, where the deposit will fall from $98,000 to $24,500, a difference of $73,000.
Here’s how much less you’ll need for your deposit under the scheme, according to Finder:
Part of the scheme is that first-home buyers will also not need to buy Lender’s Mortgage Insurance (LMI) that can cost up to $10,000.
“While 5 per cent deposit loans are not uncommon, what’s really shaking things up is the ditching of lenders mortgage insurance (LMI), which will make these kinds of mortgages cheaper,” said Finder personal finance expert Kate Browne.
“This is quite a significant saving, but LMI is not necessarily an upfront cost and therefore doesn’t have to stop first home buyers entering the market.”
But the scheme isn’t without its risks, Browne warned.
“You’re entering into a 30-year contract – you want to make sure you can afford repayments over the long term not just this election year,” she said.
Buyers should factor in a buffer of 2-3 per cent on top of their current interest rate to make room for future rate hikes, she advised.
“It’s not something everyone thinks about at the time of purchasing property, but it’s a crucial consideration.”
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