Look before you plunge into the housing market

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Look before you plunge into the housing market
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Fear of missing out and record-low interest rates may be inducing some people to buy a home that could seriously harm their financial wellbeing. | jcollett_money homeloans mortgage housingmarket

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The fear of missing out as house prices rocket is tempting some buyers to take a plunge into the property market with only a small deposit in a bid to take advantage of record-low interest rates.

More than three-quarters of lenders listed on the Canstar database now have mortgages that allow lending to those with deposits of just 5 per cent. Then there is the extra expense of required lenders’ mortgage insurance, which protects lenders but is paid by any borrower with a deposit of less than 20 per cent. This insurance can run into tens of thousands of dollars.

Sally Tindall, research director at RateCity, says a combination of record-low interest rates and escalating property prices are pushing people to take on more debt.

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theage /  🏆 8. in RU
 

jcollett_money 'someone buying a $800,000 a property with a 5 per cent deposit would pay almost $70,000 more in interest over 30 years, compared to the same person putting down a more regular deposit of 20 per cent.' $70k over 30 years isn't a deal breaker.

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