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Bank opens 40-year-old mortgage for first home buyers
In addition to schemes and stamp duty exemptions, first home buyers can now opt for a longer-term mortgage to reduce monthly repayments and enter the market more quickly.
First home buyers aged 18 to 40 can now begin their property journey with a 40-year mortgage, which reduces monthly repayments and enables them to enter the market faster as dwelling prices continue to rise.
Great Southern Bank (GSB), which is offering the new longer-term loan, said the product will allow first-time buyers to take their first step in the property market.
The lender said the move follows data showing that 29 per cent of Gen Z and Millennials and 19 per cent of Gen X showed interest in 40-year home loans if it meant they could have lower monthly repayments.
The loan will be available for borrowers up to 40 years old choosing a principal place of residence (PPOR) on a new, existing or construction home, with a maximum loan-to-value ratio (LVR) of 90 per cent.
GSB chief customer officer Rolf Stromsoe said having smaller monthly mortgage repayments will be the difference between renting and buying.
“This could be their ‘starter home loan’ – exactly what they need to get their foot in the door at the beginnings of their home ownership journey,” Stromsoe said.
While having shorter repayment is one of the benefits for first-time buyers, GSB said that longer-term loans could result in higher repayments over the course of the loan, with the bank expecting borrowers to refinance or make additional early payments.
“As their needs evolve and their earnings capacity changes, they may refinance any number of times – but this is the loan that can start it all,” Stromsoe said.
