Yellow Brick Road has launched a new home loan for first home buyers that enables borrowers to sidestep genuine savings requirements.
The First Step home loan, unveiled today, allows first home buyers to source a home loan deposit from a range of sources, including family gifts, inheritance or a tax return, rather than their own personal savings.
The major banks typically require first home buyers to demonstrate a track record of consistent savings over a period of several months in order to qualify for a home loan.
According to Mark Bouris, chairman of Yellow Brick Road, these requirements squeeze many would-be home buyers out of the market.
“The big banks often require a borrower to show that their deposit is the result of a savings plan, which can make it much harder for people to buy their first home,” he said.
Furthermore, savings histories were not a genuine indication of a borrower’s ability to service their loan, he said.
“More important factors are their income and their credit history, not the origin of their deposit,” he said.
The First Step home loan will offer a loan-to-value ratio (LVR) of up to 95 per cent, which means first home buyers only need to source a deposit of 5 per cent.
On a $300,000 property that would equate to $15,000.
The product comes with a variable interest rate, which currently sits at 6.59 per cent.