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Tiny proportion of first home buyers use a guarantor

Posted: 18 May 2018 9:12 am
News

Young couple buying a homeWhile only a fraction use guarantors, 40% will need assistance to buy.

Research by Mortgage Choice has found only 4.9% of first home buyers surveyed said they had used a guarantor to buy a property.

"The data raises the question that many are divided on: Are first home buyers missing an opportunity to get into the property market by not engaging a guarantor?" Mortgage Choice CEO Susan Mitchell said.

According to Mortgage Choice, the average first home buyer needs a deposit of $100,000 to buy a median-priced dwelling. The company's Evolving Great Australian Dream 2018 white paper found that, in spite of the low uptake of guarantor loans, 40% of buyers would need some form of assistance to buy.

"The Government’s new plan to allow older Australians to stay in their homes for longer, as part of the ‘More Choice Longer Life Plan’ is likely to hinder the supply of available properties to those looking to buy their first home," Mitchell said.

While a small proportion of total first home buyers said they would use a guarantor, 21.8% of buyers aged 29 years or below said they would ask someone to go guarantor on their mortgage.

"Having a family member go guarantor on a mortgage is not without risk and as such, no one should jump into the situation until they’ve given it considerable thought," Mitchell said.

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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 90% Incl. LMI (Owner Occupier, P&I)
2.78%
2.79%
$0
$0 p.a.
90%
$2,000 to $3,000 refinance cashback
Get a competitive variable interest rate with no application fee or ongoing fees. Refinance to an eligible Suncorp loan and get a cashback of $2,000 or $3,000, depending on your loan amount. Other conditions apply.
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
IMB Budget Home Loan - Special LVR  ≤90% (Owner Occupier, P&I, NSW and ACT borrowers only)
2.78%
2.84%
$449
$0 p.a.
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NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
CUA Fixed Rate Home Loan - 3 Year Fixed (Owner Occupier, P&I)
2.49%
3.99%
$600
$0 p.a.
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Pay no ongoing fees and lock in your rate for 3 years to organise your budget. Eligible new home buyers with low deposits can apply for the First Home Loan Deposit Scheme with this lender and avoid LMI costs. Eligible refinancers can get a $2,000 pre-paid credit card when they switch to CUA.
Yard Variable Home Loan - LVR 90% (Owner Occupier, P&I)
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A competitive variable rate for home buyers with 10% deposits saved. Optional offset account (with $10 monthly fee).
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