Genuine Savings

M

malpass

Hi all,

In regards to a previous thread I read it mentioned major banks having waived the requirement for 5% genuine saving. Can someone let me know which banks (I know Homepath is one lender) ,what type of rate and does it mean the mortgage insurers have changed their policy as well.

The only lenders I know that has this product is Carrington National and Liberty but their interest rates start from mid 8's I think.

Cheers

Malpass
 
Hiya

Both CBA and ING have killed the gen savings requirement.

Westpac have reduced theirs to 3 mths.

The rates are standard rates normal available variable and fixed rates with no extra mark up, so 6.62 for a pro pack IO IO loan with 100 % offset in CBA case using their pro pack product.

GE undewrite ING and CBA, other lenders will follow suit eventually, though stick in the mud NAB and ANZ will take a while I think

ta

rolf
 
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15 November 2005 - Westpac loosens home loan standards
Financial Review
Westpac loosened its lending criteria for home loans sourced through mortgage brokers. Changes include a willingness to lend on flats with a area of at least 35 square metres, down from a previous minimum of 50 square metres, and a reduction in the requirement for genuine savings to three per cent, down from five per cent previously.
 
Nice! But this undoubtedly would lead to more people that could generally not afford to buy a place purchasing and getting themselves in a tight situation! The banks certainly make it easy for the herd mentality to live above their means :(
 
vandalic said:
Nice! But this undoubtedly would lead to more people that could generally not afford to buy a place purchasing and getting themselves in a tight situation! The banks certainly make it easy for the herd mentality to live above their means :(
Click to expand...


And that claim is based on what logic?

If somebody has a high income but has not saved a deposit due what ever reason, there is no reason why they can't afford to pay off a loan. Just because you borrow at a higher LTV it doens't mean you cant afford the loan.

Think about a car lease, the finance company lent me $35,000 to buy a $33,000 commodore ...does that mean I will automaticaly default the next day??


I know from my own experience that I had been out of uni for 2 years, had a good time and secured a good job but not saved any money (see "had a good time" comment) then I decided I needed to buy a house.

Luckily the company I worked for would lend upto 100% of the purchase price + stamp duty. I bought an OK house in a good area and never even thought twice about the repayments....within 5 years the value of the house tripled. :)



If I have applied your flawed logic I would have spent 3 years saving a 20% deposit and then pay double for the same house....no thanks :(
 
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Hi nat r,

Good for you! Great story :)

And consistent with the basic wealth creation philosophy that it's good to stretch towards purchasing assets that will ultimately increase in value, but not to buy toys/depreciating assets.

Cheers, Medine
 
My mate at cba advised that mortgage insurers (theirs) is letting people use the first home owners grants again for deposit again. This combined with no need for savings history leaves a bit of thinking...

Question thus is
(1) will this start a new property cycle bump in as its getting more borrowers into the market again....
(2) Can anyone confirm if this is true (the grant bit)

thx
L
 
Last edited by a moderator:
Lukentel, the grant bit is true. As long as the 5% deposit is not borrowed it can come from anywhere (e.g. savings, gift & FHOG).

Cheers

Patrick
 
Patrick

Maybe to clarify...

It isnt the 5% bit as deposit, it is if they only have say 2% and the grant can cover the rest, which I assume to be legals and costs then its a goer. I.e. the 5% savings (or would deposit be a better word) is out the window.

so, if thats the case someone could but a dogbox for say what $70,000 (as a guesstimate) and have no/minimal deposit and they'd be able to do it as the grant would cover all aspects.

Oh, to be a first home buyer... and here I busted my hump saving my deposits....

So, what about the guesses about the property market allowing first home buyers back in sooner....

thx
L
 
Hi Lukentel,

If you bought something so small that it only cost $70,000 I'd be careful about getting a loan. It might be too small for the mortgage insurers to accept as security :eek: .........

Cheers, Medine
 
Hi Lukentel,

Obviously borrowers will still need funds to pay for costs but in the case of a first home buyer in NSW the out of pocket costs are very little. They don't have to pay stamp duty for properties priced under $500k and the mortgage insurance is capitalised to the loan. Essentially all they need to come up with is conveyancing fees, lender application fee, mortgage registration fee etc.

So in the case of someone purchasing a property for $300k in Sydney they would need a 5% deposit of $15,000. If for example they only had $11,000 in cash the $7,000 FHOG would make up the remainder of the 5% deposit and would also most likely cover purchase costs.

Cheers

Patrick
 
Interesting point, thanks Patrick.

Med, fortunately I wont be in that boat. (1) I wouldnt qualify for the grant and (2) That simply does not happen in Queensland a property for sale at $70,000 is unheard of.... :)
 
Dont think i need to borrow 70k - its just a rough figures thing initially and thats too low for what I am looking at doing presently.

To re-clarify above, I was simply asking the question about proportions - I think pat covered off pretty well. as I already have a few places around town I dont think I'd get the grant...

Re: the 106% bit... you suggesting cross collateralisation? I thought that was a no-no on the forum... :) but I dont know where you came to 106%

thx
L
 
Lukentel, I think Richard was referring to the standalone 106% loans now available (albeit with fairly high interest rates which is understandable considering the risks they are taking).

Cheers

Patrick
 
luke

Yes sorry i was referring to 106% standalone deal.

And i just purchased 2 properties in Qld for $72k & $76K both +cash flow. I assure they are out there you just have to keep digging.
 
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