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Banks relax lending rules for renters who want to buy
By Tammy Barton

Sold real estate sign Home loansIn December 2010, BankSA announced that it would follow St George’s lead in allowing potential borrowers to use their history of rental payments as evidence of their ability to save when they apply for a home loan. The move is expected to open the door to home ownership for people who find it hard to save a deposit while paying high rents.

The change in lending policy has received mixed reactions. Supporters argue that the new rules will level the playing field for would-be first home owners who are paying inflated rental prices. Critics argue, however, that high housing prices are the real problem and that relaxed lending rules could push house prices higher still.

I think it comes down to your specific situation. If it’s your dream to own your own home, this change in lending policy might bring you a step closer. But it’s important to not commit to a mortgage which is beyond your means or which leaves no wiggle room for savings, interest rate hikes and rainy days. Also, don’t forget that the purchase price of a home is only part of the overall expense—there are also legal and conveyancing fees, bank fees, mortgage insurance (if applicable), moving costs, and, the big one, government stamp duty.

Before you approach a bank, start by using the home loan calculator on the MyHomeloans website to work out your potential repayments and begin talking to one of our consultants about how a mortgage would work into your budget. We can help you work out what you can afford and put a savings plan together. That’s what we do—help people get ahead so that they can afford to live their dreams, whatever those dreams may be.

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