Its My Home : 2015
IT’S MY HOME - Summer 2015 | 21 HOW LENDERS MORTGAGE INSURANCE CAN HELP YOU GET INTO YOUR OWN HOME SOONER Bridget Sakr, Chief Commercial Officer at Genworth, explains one way of getting into your own home sooner R ising property prices in many locations, combined with cost of living pressures and the everyday stresses of life, mean that it is as difficult as ever to save a deposit to buy a home. In 2014, Genworth conducted a survey of over 2,000 Australian consumers to gauge sentiment around the property market and mortgage stress. The survey found that one in three prospective first homebuyers were struggling to save a deposit for a home. The research also showed that two thirds of all homeowners believed it was harder for today’s first home buyers to enter the market than it was for previous generations. When considering how long it would take to save a 20 per cent deposit in the current market, almost 60 per cent of all those surveyed estimated it would take them four years or more. Many prospective first home buyers are also sacrificing many things in life to try to scrape together that all-important deposit. Lenders Mortgage Insurance, or LMI, may help you to buy a home without having to save a 20 per cent deposit. This is because LMI insures the lender in the event that you default on your home loan. Doing so reduces the risk for the lender because they’ve passed that risk on to the LMI provider. And because the lender has reduced their risk, they are more willing to lend the funds for a property to a borrower with a smaller deposit – sometimes even as low as five per cent of the value of the property. Using LMI means that a home buyer who is interested in a $500,000 property, and facing the prospect of saving a $100,000 (20 per cent) deposit could potentially only have to save $25,000 (five per cent). This means they can get into their home sooner, begin paying off their home loan and potentially start building equity sooner.