I thought that I would just give an update on the state of play with Mortgages, grants and the buying process currently as things to tend to change regularly.
Mortgage Deposit / Loan to Value (LVR) requirements
The minimum deposit requirements at the moment range from 5% – 10%, this means that the maximum loan to value (LVR) would be 90% - 95%.
As an example if a lender required a 5% deposit on a $350,000 property the loan to value would be 95% i.e $17,500 deposit (therefore mortgage amount $332,500 / property price $350,000 = 95% LVR)
Different conditions apply to Temporary Residents (see below)
Lenders Mortgage Insurance
If someone is borrowing over 80% LVR i.e they have a deposit of less than 20% then a Lenders Mortgage Insurance (LMI) premium is payable.
This is a one off insurance premium that is designed to protect the lender in the event of a default by the borrower leading to the lender having to sell the property at a price less than the outstanding loan.
The premium payable is tiered based upon the overall LVR and property price.
As an example of the cost of LMI, a property price of $350,000 with an LVR of 90% i.e $315,000 mortgage would incur a Lenders Mortgage Insurance premium between $4,600 - $5,800 dependent upon the lender.
This fee can be paid directly from your own funds or in many cases added to the mortgage, by adding to the mortgage this is known as capitalising the LMI.
There are some lenders that are in a position to offer a reduced LMI premium under certain conditions, one being that certain Medical Professionals pay no LMI up to 90% (this could save thousands!!)
Costs to Buy (Stamp duty etc)
When buying an established property the approximate costs to buy are around 5% of the purchase price, this includes State and Federal government fees. It is also advisable to have around $1,000 - $2,000 as a contingency. For a property of $350,000 it would be sensible to allow for around $18,000 - $19,000.
Note that the State Government recently announced that off-plan apartments in certain locations will receive an exemption from stamp duty.
If you are looking to build a home then stamp duty is only payable on the value of the land and not the build.
SA First Home Owner Grants
First Home Owner Grant (FHOG) – http://www.revenuesa.sa.gov.au/grant...st-home-owners
Available for eligible first home owners to the value of $15,000 for new homes as of 15th October 2012.
Please note that the grant has a property value cap of $575,000.
FHOG for established homes ceased on 30 June 2014!
Temporary residents are allowed to buy property and are able to obtain mortgages to do so however there are usually some conditions.
Foreign Investment Review Board (FIRB) approval - http://www.firb.gov.au/content/real_...esidential.asp
It is a requirement to obtain FIRB approval prior to purchasing a property. If the property is to be used as your main residence then there are generally no issues with the type of property purchased i.e new or established.
FIRB approval for temp residents buying a home is generally a formality but does have to be obtained.
Mortgages generally restricted to 80%
Generally temporary residents are restricted to borrowing a maximum of 80% LVR meaning a deposit of at least 20% is required.
The reason behind this is due to the Lenders Mortgage Insurance companies classing temporary residents as non-residents and their reluctance or an inability to insure them.
Recently 3 Banks have announced that they will look to lend certain temporary residents up to 90% inclusive of LMI, this is quite a positive step for temporary residents.