Non Genuine Savings Update

4 Aug '13

Non Genuine Savings Update - 95% loan valuation ratio (LVR) still available for non-genuine savings.

First Home Owner

In early 2008 there were numerous banks and lenders that would accept the first home owners grant as genuine savings towards to first home purchase. They would also consider lending 100% of the purchase price with no additional security required.

The mortgage insurers assisted banks and lenders by covering the risk in lending 100% to first home buyers nd charge a risk fee accordingly. As a guide, mortgage insurance (LMI) is between 2.5 to 3.5% of the loan amount should you wish to borrow 100% of the purchase price with no additional security.

Since the global liquidity crisis has unfolded during 2008, we have seen mortgage insurers wind back heir policy and make it that little tougher for first home buyers and in particular those that wish to use the first home owners grant as genuine savings. The number of major lenders that offer mortgage loans to borrow 100% of the purchase price has dwindled dramatically. The banks and lenders that use the traditional 2 mortgage insurers being Genworth and QBE/PMI cannot now offer these 100% products. It is the lenders that have an unique mortgage insurance proposition that can still offer these products.

As it was in 2001 - 2003 the first home owners grant was considered to be somewhat of a tease to those wishing to purchase their first home with no genuine savings. Unfortunately after a great few years of free flowing credit we have returned to the era of genuine savings being required or the banks, lenders and mortgage insurers will not approve the loan. Fortunately there are still a few options available with no genuine savings and who will still consider lending 100% of the purchase price. However, be warned that if you require 100% of the purchase price the few banks and lenders that will consider your application have had their turn around times blow out dramatically. In some cases we have seen what would have been approved unconditionally in 5 - 7 days has blown out to almost 3 weeks. It is extremely important in this environment to have your finance pre-approved and allow for longer finance clauses in the states that allow for this.

For more detailed information go to First Home Owner website also powered by NFC.