In today’s competitive property market, it’s never been more difficult to buy your first home.
Research from RACQ Bank has revealed many young people (aged 18-34) would like to buy a home within the next 12 months^ but that record high property prices and interest rates have made it increasingly difficult to save for a house deposit and comfortably afford the repayments on a home loan.
Home ownership may be closer than you think thanks to RACQ. Picture: Getty
“Surging house prices, interest rates, and the rising cost of living are making it difficult for young Queenslanders to enter the housing market,” says RACQ Bank’s Head of Lending Product Operations and Distribution, Medina Cicak.
To help young people get their foot in the door, RACQ Bank offers a suite of home loan features designed specifically for first home buyers.
From a 5% deposit* to flexible loan terms, here are five ways RACQ Bank is lending first-home buyers a helping hand.
1. A 5% deposit* on eligible home loans
“With record high property prices, it can seem increasingly difficult to save for a house deposit and comfortably afford the repayments on a home loan,” Medina says.
Traditionally, a 20% deposit is required to avoid paying Lenders Mortgage Insurance (LMI), a sum that can be prohibitive for many.
RACQ Bank addresses this challenge head-on by offering eligible home loans that require only a 5% deposit*.
Medina says one advantage of a smaller deposit is the ability to get into the housing market sooner rather than later and potentially reduce the need to pay rent.
“While there are costs associated with LMI, it can be added to your loan amount and can help you enter the property market sooner to start growing equity in your home,” she says.
2. Flexible repayment options
RACQ Bank understands that financial circumstances can vary widely among first home buyers.
There are a number of ways to structure your loan, meaning you can find an option that suits you. Picture: Getty
“Borrowers have the flexibility to make repayments weekly/fortnightly and make additional payments to help reduce the overall interest of the loan,” Medina says.
“Consider small changes to how you pay. If you pay early in the month and not right on the due date, you can reduce your interest charged.”
This is due to interest being calculated daily and charged monthly so the sooner you can make a payment to your loan, the less interest that will be charged.
3. No monthly account keeping fees
Monthly account keeping fees can add up, diverting funds that could otherwise be used to pay down your mortgage faster.
By removing monthly account keeping fees, Medina says first home buyers are able to direct more funds towards their principal, getting them closer to outright homeownership.
4. Competitive interest rates
The interest rate on your mortgage can significantly impact the total cost of your home over the life of the loan.
RACQ Bank offers competitive interest rates, ensuring that first home buyers have access to affordable financing options.
Competitive rates mean lower monthly repayments, making the financial commitment of a mortgage more manageable.
“Look for a loan that not only provides a competitive interest rate but have features that you will use and benefit from,” Medina says.
5. Up to 40-year loan terms for first home buyers on eligible home loans
Traditionally, home loans are structured over a 25 to 30-year term.
Extending the traditional loan term to up to 40 years is a game-changer for first home buyers.
Medina says by offering a longer loan term, the bank is not just reducing monthly repayments; it’s also increasing borrowing capacity, giving greater flexibility and more options in the housing market.
Loan elements like an extended home loan repayment period can really help young people get into the market. Picture: Getty
This extended term can make a significant difference in managing monthly repayments, providing first home buyers with a more accessible pathway to homeownership.
Thinking about buying?
Medina advises before you even begin your property search, speak to a lender about what it is you want in a home, because this can help you create a relationship and set goals.
“We’ll help you navigate the first home buying journey.”
Banking and Loan products issued by Members Banking Group Limited ABN 83 087 651 054 AFSL/Australian credit licence 241195 trading as RACQ Bank. Fees, charges, terms and conditions apply. Contact us for a copy. This information does not take into account your personal situation. Consider if appropriate for your situation before acting. *5% deposit of the property value excluding LMI and all other government fees and charges.
^Survey findings from RACQ Quarterly Consumer Omnibus, FY24 Q1, n=399.
