Westpac Increases Down Payment Requirement For First Time Home Buyers

Post by NeilMc on January 21, 2010 · Under Business News, Company News, banking, home loans, mortgages · 1 Comment 

First time mortgage borrowing customers of Westpac will now be required to fork over a minimum deposit of $37,500 to be able to qualify for an average home loan from the lender, as part of policy changes that became effective on Wednesday.

The Sydney based lender has advised its mortgage brokers and managers that all first time borrowers will not be eligible for a mortgage unless they can meet the new loan to valuation ratio of 87 per cent, rather than the previous level of 92 per cent.

First time home buyers wishing to buy a $250,000 property will now be required to make a larger down payment, and be able to meet a monthly repayment of $1726 on a 25 year loan.

The rules for qualifying for a mortgage are even more onerous at Westpac’s captive mortgage broking unit Rams. The mortgage broker which originates as much as 20 per cent of Westpac’s mortgage book confirmed through a spokesperson that its customers must meet a loan to valuation ratio of 85 per cent, instead of the former 90 per cent ratio according to The Australian.

Low documentation loans  require even larger deposits, and loan to valuation ratios must not exceed 80 per cent instead of the previous 82 per cent.

Borrowers wishing to take advantage of previous loan to valuation ratios will only be able to if they have history with the lender and an existing banking relationship, which can be as simple as holding a deposit account. Borrowers must have held the account for at least six months to be able to qualify, and current borrowers are not expected or required to comply with the changes.

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One Response to “Westpac Increases Down Payment Requirement For First Time Home Buyers”

  1. First home buyers need more deposit to buy - Property Journal on January 22nd, 2010 1:07 pm

    [...] Westpac Increases Down Payment Requirement For First Time Home Buyers Money AU [...]

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