Hello Darryl. Welcome to the forums.
Keystart home loans
are designed to make homeownership a reality sooner and are mostly a transitional lender. Their qualifying criteria for low deposit home loans
are very lenient in some aspects and can save you thousands of dollar in lenders mortgage insurance (LMI)
fees. However, as you’ve rightly pointed out, their low deposit home loan’s interest rates are rather high. Currently, their low deposit home loan interest rate is 4.94% p.a. (comparison rate is 5.03% p.a.)
A good way to look at it is how much extra interest you may have to pay and compare that with how much you’re saving in LMI fees. For a $380,000 property, your home loan amount is ($380,000 less your 2% deposit = $372,400). You’re saving anywhere between $12,000-$13,000 in LMI fees approximately.
Now, you’ll be paying $714,000 over the life of the loan at principal and interest repayment on a 30-year term with that interest rate. However, if you were to get the same loan at 3.94%, over the life of the loan you’ll pay $635,413 in total. You’ll pay an extra $79,000 in interest. At the end of the day, you’re out of pocket ($79,000 less $13000 lmi savings) $66,000.
Ultimately, saving a deposit
can be quite tough. So, for those who just want to buy a home now, it could be a fair trade. However, there are a few no deposit home loan options that a lot of Australians are utilising.
Give us a call on 1300 889 743
or fill in our free assessment form
to find out if you qualify for a low deposit home loan.