Imagine being able to use your rental history as evidence of genuine savings when trying to get a home loan…
Well, now you can.
Mortgage broker Loan Market has been lobbying the banks to allow people applying for a home loan to use rental payments as evidence of savings and it has been answered by one of the nation’s major lenders.
Loan Market chief operating officer Dean Rushton says St George has become the first Australian bank to change its requirements in regards to rental payments, in a move which will provide much-needed help to first-home buyers.
Rushton says St George will accept rent as a form of savings for a home deposit if there is evidence of a minimum of 12 months continuous, satisfactory rental history and the property is leased through a licensed property manager.
This is a significant breakthrough for first-home buyers and a move which could be a major boost to the home finance industry, he says.
Higher interest rates, tougher lending conditions and the end of the boosted federal government grants at the end of last year have driven first-time buyers out of the market.
Another major restriction has been the difficulty in saving a deposit for a home loan, particularly in this economic climate with people having to cope with massive cost of living increases including rental payments.
Australian lenders require a percentage of the purchase price normally 5 per cent minimum to be saved for all loans but it is extremely difficult for people paying the high rents customary these days to save money.
If rental payments are taken into consideration as a factor in assessing genuine savings, that would enable many people to pursue the dream of home ownership.
Article from news.com.au