Media Release

From Monday 27 July 2020, eligible first homebuyers can benefit by reducing the cost of Lenders Mortgage Insurance (LMI) to $1.00 for a Loan to Value Ratio (LVR) up to 85%.

The move paves the way for first home buyers to buy their first home by saving a 15% deposit, instead of the traditional 20% of the value of a property purchase price, without the full cost of LMI.

BankSA Chief Executive, Nick Reade, said saving for a deposit is one of the biggest barriers to home ownership for first home buyers.

“We know that first homebuyers can spend years saving for a deposit,” said Mr Reade.

“This initiative will significantly reduce the deposit required, providing a welcome boost for many South Australians,” he said.

Generally, a home with a property value of $500,000 means a buyer would be looking at a one-off payment of around $4,000 for the cost of LMI if they had less than a 20% deposit.

BankSA research found that on average, South Australians spend more than five years saving for a deposit. [1]

“Many first home buyers are making changes to their lifestyle, including reducing discretionary spending, working overtime or taking up additional side jobs, to get into their own home sooner.

“By reducing the deposit required, and the associated cost of LMI, first time buyers may be able to buy a property that meets their needs sooner and save thousands of dollars in the process.”

Despite uncertainty during COVID-19, recent BankSA research showed that more than half of South Australians think it is still a good time to buy property, while 36% have put off buying or selling property due to current market conditions.²

Two thirds of Australians say they would now place a greater importance on certain features of a home, and for a quarter of South Australians with a quarter of South Australians placing greater importance on having a backyard and 14% on an outdoor entertaining area. Almost three quarters of South Australians would prefer to live in a house over an apartment. ³

“People have spent more time at home than ever before during the COVID-19 restrictions, and this is being reflected in the features potential home buyers are looking for,” Mr Reade said.

“This initiative is designed to help make the goal of home ownership within closer reach for first home buyers, particularly with the added benefit of a record low interest rate environment.”

Awarded the Canstar Bank of the Year for First Home Buyers 2020, BankSA is helping first home buyers get a foot in the door sooner.

The BankSA First Home Buyer home loan offer in detail:

The BankSA First Home Buyer home loan offer means eligible customers can put forward a minimum deposit of 15% of the value of the property (LVR² up to 85% at the time of approval) and BankSA will reduce the cost of Lenders Mortgage Insurance to just $1.00 – which can save thousands.

The offer is available for owner occupier first home loans on principal and interest repayments, with a maximum loan size of $850,000 (up to a maximum property value of $1,000,000).

For more information, customers can speak to an accredited broker or visit our website banksa.com.au

First Home Buyer Glossary

• Deposit: You generally require 20% deposit of property value to avoid paying Lenders Mortgage Insurance.
• Loan-to Value-Ratio: Loan-to-value ratio (LVR) is a common home loan term and stands for the initial loan-to-value ratio at loan approval. LVR is the amount of your loan compared to the bank’s valuation of your property offered to secure your loan expressed as a percentage. It’s used by lenders to assess the risk of a home loan.
• Lenders Mortgage Insurance: LMI is generally needed when you have less than 20% deposit. This is an insurance cover that protects the bank from encountering any loss if you can’t repay your home loan. It’s a one-off payment based on the amount borrowed and the size of your deposit.
• Owner Occupier: The loan purpose whereby the property you live in.
• Principal & Interest Repayments: When you pay principal and interest repayments, each repayment goes towards paying off both the amount borrowed to buy the property (the ‘principal’) as well as covering the interest. By the end of the loan term (which can be up to 30 years), both the amount borrowed and the total amount of interest owed will be repaid.

^{About the Research:}

^{1 The BankSA/St George Housing Study was commissioned by St.George and conducted by Lonergan Research in accordance with the ISO 20252 standard. Lonergan Research surveyed 1507 Australians aged 18+.}

^{2 The BankSA/St George Covid-19 Home Buying research was commissioned by BankSA and St. George, and conducted by Lonergan Research in accordance with the ISO 20252 standard. Lonergan Research surveyed 1,017 Australians aged 18+.}

^{3  The Westpac Group research was conducted by Lonergan Research in accordance with the ISO 20252 standard. Lonergan Research surveyed 1,176 Australians aged 18+, including 268 small-medium business leaders. Surveys were distributed throughout Australia including both capital city and non-capital city areas. The survey was conducted online amongst members of a permission-based panel, between 18 May and 22 May 2020. After interviewing, data was weighted to the latest population estimates sourced from the ABS.}

^{The important product detail:}

^{1 Credit criteria, fees and charges apply. Based on BankSA’s credit criteria, residential lending is not available for Non-Australian resident borrowers. This offer is available for first home buyers who apply for their first home loan and have 15% of the property’s value as a deposit (in other words, an LVR of up to 85% at time of approval). The minimum deposit requirements are based on the bank’s valuation of the property. Your application will be assessed and once approved, you will be charged LMI of $1.00. This will be reflected within the Loan Offer Documents. LMI is subject to approval and customer must adhere to LMI obligations during the loan agreement. This offer is not an LMI wavier. LVR stands for the initial loan to value ratio at loan approval. LVR is the amount of your loan compared to the bank’s valuation of your property offered to secure your loan expressed as a percentage. First home buyers are applicants applying for their first home loan for their first property. For joint applications, only one applicant must be a first home buyer. Owner Occupier Principal and Interest repayments only. Offer current as of 27 July 2020. Offer may be varied or withdrawn at anytime. Maximum loan size of $850k. Excludes Residential Investment Loans, Portfolio Loans, Constructions Loans, switches and refinances of home loans within the Westpac Group which includes St.George, Westpac, Bank of Melbourne, BankSA and RAMS. Offer not available for Owner Occupier Interest Only loans or residential lending originated under family or company trusts. Offer not available in conjunction with Family Pledge option. Only one property to be financed per application. Lenders mortgage insurance (LMI) is issued to Westpac Banking Corporation ABN 33 007 457 141 (Westpac) by either Westpac Lenders Mortgage Insurance Limited ABN 60 074 042 934, Australian credit licence 388077 a subsidiary of Westpac, or by another LMI insurer. This information does not take into account your personal circumstances. Terms, conditions and limitations apply.}

^{2 LVR stands for the initial loan to value ratio at loan approval. LVR is the amount of your loan compared to the bank’s valuation of your property offered to secure your loan expressed as a percentage. Home loan rates for new loans are set based on the initial LVR and don’t change because of changes to the LVR during the life of the loan.}