WA More Buyers Than Other Regions
Becoming the best luxury home builder in Western Australia is a dream for home builders in the area. In a recent report disclosed, WA first time home buyers makes up the biggest borrowers in Australia. More than 60 percent of the first time home buyers are borrowing at least 90 percent of the cost of their houses. This goes to show that the property sector in the region continues to stabilize and is expected to perform well in the future.
The number of borrowers in West Australia is estimated to be about 10 percent higher than the overall national average. The Mortgage Choice data also showed that first home owners in WA are borrowing at very high amount with over 80 percent of the buyers heavily relying on mortgage insurance. The head of corporate affairs of Mortgage Choice, Jessica Darnborough said that a lot of home owners did not realize that the lenders mortgage insurance was created to protect the banks and not the buyers in case when the buyers defaulted on the mortgage.
She further said that avoiding the lenders mortgage insurance is a great way to reduce the cost of loan and recommended that buyers could do this through a parental guarantor, saving a greater deposit or borrowing money intended for the deposit.
A money expert, Michelle Hutchinson agreed that buyers should take heed what the head of Mortgage Choice recommended in that buyers should avoid LMI. She further said that first home owners should instead consider the deals that came with offset savings account of consider a free redraw plan. However, Rate City financial analyst Peter Arnold warned the home buyers to be wary of some banks that are offering different incentives like low interest rate for 2015. The home buyers should be careful and be on guard of the hidden costs of such deal like withdrawal charges.
Lenders Mortgage Insurance facts
The LMI consists of a one-off fee that is added to your loan in order to protect the bank in case you default of your mortgage. Banks will charge this to borrowers 80 percent or more. The only way in order to avoid this is to have a deposit of more than 20 percent or through a parental guarantor.