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Canberra & Perth
The OwnHome Deposit Boost Loan proposes an innovative approach to homeownership, especially for aspiring home buyers aiming to enter the property market without the traditional hurdle of saving a large deposit. This financial product is designed to bridge the gap for potential homeowners, making it feasible for those with solid incomes and good credit scores to purchase their homes sooner than they might have thought possible.
Here’s a clearer breakdown of how it works and its benefits:
OwnHome’s Deposit Boost Loan specifically addresses the challenge of accumulating a 20% deposit. Rather than saving this substantial amount, borrowers can receive a loan for the 20% deposit needed to secure a traditional 80% loan-to-value ratio (LVR) mortgage from another lender. This arrangement opens the door to owning a home with what is effectively 100% financing when combined with the primary mortgage.
A significant advantage of the Deposit Boost Loan is the avoidance of Lender’s Mortgage Insurance (LMI). Typically, LMI is required for loans with an LVR above 80%, representing an additional cost to the borrower. However, by structuring the financing through a 20% deposit loan from OwnHome plus an 80% LVR loan from another lender, borrowers sidestep this expense.
OwnHome requires a relatively minimal financial commitment upfront from the borrower—specifically, a 2% plus GST Starter Fee of the property’s purchase price. This fee covers essential services, including buyer’s agent services, building and pest reports, and other common fees and charges involved in the home buying process. Essentially, it allows borrowers to unlock the deposit loan without needing to have substantial savings.
OwnHome offers a comprehensive package of services to assist buyers throughout the home buying process. This includes property finding and assessment, transaction support, and even post-purchase assistance in selling the home if needed. Customers benefit from daily updates, weekly consultations, access to detailed property appraisals, and a digital tool for home finding. Furthermore, OwnHome provides negotiation support, including auction strategies and bidding.
At least one of the applicants must be an Australian citizen or hold permanent residency, which broadens the eligibility to a range of applicants residing in Australia.
Applicants must have a stable and high enough income to not only service the Deposit Boost Loan but also to comfortably manage payments for an additional home loan with a Loan to Value Ratio (LVR) of 80%. This implies a significant focus on financial stability and ensures that borrowers are not overstretched in their financial commitments.
A strong emphasis is placed on the applicant’s creditworthiness. To qualify, applicants need to have an excellent credit score — with an average score of at least 750, or preferably over 900. This requirement highlights the importance of a good financial track record and responsible credit management.
Applicants are required to have sufficient funds to cover upfront costs, including the Starter Fee along with Goods and Services Tax (GST) and Stamp Duty. This ensures that borrowers are financially prepared for the initial costs associated with purchasing a home, beyond just the loan repayments.
The property in question must not only meet specific price criteria but also be located within an area that the lender currently serves. This condition ensures that the investment aligns with the lender’s market presence and property value assessments.
These criteria are designed to ensure that applicants are financially stable and ready to take on the commitments of a home loan, while also aligning with the lender’s risk and market strategies. Potential applicants should carefully review these requirements alongside their personal financial situations and the specifics of the property they wish to purchase to assess their eligibility for the OwnHome Deposit Boost Loan.
In summary, the OwnHome Deposit Boost Loan is designed to make homeownership more accessible to first home buyers by eliminating the traditional barrier of saving for a large down payment. It facilitates entering the property market sooner, with comprehensive support services to guide buyers throughout the process. This innovative approach to financing and home buying support is particularly appealing for those with the financial stability to manage mortgage repayments but who may not have the resources to save for a traditional deposit.