How easy is it to get a mortgage right now?

Can anyone tell me what the current situation is with lending for mortgages right now - and if they know where things might be heading?
We are thinking about buying our first home in melbourne. Dh works (but as we moved here from overseas he has only been in the job half a year). We do however have some savings and will be able to get the first homebuyers grant.


Are banks lending now? Not sure with the economic crisis if the banks will be very willing to lend. Perhaps they have want you to have very high income or large deposit?

Depends on your deposit first off I'd say. I don't think any banks will give 100, 95, or 90% loans for a long time...

Friends on DH's have just been approved for a 350k (100% ) loan to build a new home and buy land.

They had to jump through hoops to get it however. They had no deposit.

Thats was through St George bank

Also depends on where you want to live. Banks will sometimes lend you less cash if you are buying in a less 'profitable' area.

You can always get an anppointment with a bank or mortgage broker to find out your options. Most times doesn't cost anything to get info.

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You can always get an anppointment with a bank or mortgage broker to find out your options. Most times doesn't cost anything to get info.

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S'right - PM me if you want details of a pair of great brokers :)
Banks are still lending, and some are offering great deals atm. They have indeed tightened up on no- or low-deposit loans though. St George is the only bank I know of who are still offering 100% loans, and the Lenders Mortgage Insurance is horrendous.
If you have 20% of the value of the house you want to buy in savings already, (i.e. you want to borrow 80%) then that is safer because you won't have to pay the insurance premium.
Give a mortgage broker a call or drop in and see your bank rep and they will have a program that works out how much you can afford to borrow based on your financial situation.
HTH.

i;m not sure about other banks but commonwealth has just changed it so that they require you to have at least 3% deposit before they will loan to you.

also, if you go for pre-approval it is taking upwards of 2 weeks to get it through to the banks, they are very back logged apparantly.

lenders mortgage insurance was quoted to us about a month ago as heing $4800 which is kind of annoying.

hi, i can offer some advice as we just went for pre-approval today...

DH is the only income earner and we have savings to cover 20% of the deposit (after we take out the roughly $26,000 in fees and charges like stamp duty). we are also first home buyers.

we found that in relation to last year (when we first started enquiring) the banks have become alot more conservative in relation to how much they lend. for us the amount dropped by $200K despite the fact that we are now earning more!
in all honesty though, we feel more comfortable with this. the low interest rate and the loan amount we are asking for means only a $100 difference a week between the mortgage and the rent. this time last year it was a completely different picture and threatened to really impact on our lifestyle ITMS.

so although it kinda sucks not being able to borrow so much, it is also a little reassuring to know that we feel 'safer' with the amount we have.

It shouldnt be a problem that your DH has only been working there for 6 months. they usually just want 3 payslips...so that time-frame should hopefully cover it.

Can someone explain the stamp duty and extra fees?
Where I come from they do not have stamp duty. You buy your house and pay only extra for legal fees (about $1000) . Are mortgage brokers in Australia free?

well in qld you dont have to pay stamp duty if its your first home.

you do have to pay for legals and other fees though, like pest and building inspections. mortgage brokers are a free service to you but charge a commission to the organisation/ bank you end up borrowing through. as far as i know anyway.

Salsa, stamp duty on transfer is a government fee and varies from state to state. From what I understand, in VIC you still have to pay stamp duty even as a first home buyer (in NSW you don't pay stamp duty if your first home purchase is $500k or under). The duty increases depending on the purchase price of the house. It is usually a good few thousand dollars.
Registration of mortgage is about $100 in NSW - I am pretty sure that's another govt charge, but can't remember.
Mortgage stamp duty is payable for some lenders. Some lenders waive this fee. It is often a few hundred dollars, but varies from lender to lender. Lenders will also have other fees, like an establishment fee or a settlement fee. Ask your lender or your broker to give you a full breakdown of fees when you are investigating which product would suit you best.
Lenders mortgage insurance (LMI) is payable when you want to borrow more than 80% of the value of the property. It doesn't protect you, it protects the lender. LMI increases as the amount you wish to borrow increases. [Hollo: $4,800 is annoying yes, but it's actually pretty conservative. I have seen people pay over $10k in LMI recently. It is ridiculous.]
I am not sure if all brokers in Australia are free. The ones I work for are: they are paid on a commission basis by the lender, and they disclose all those details to you if you decide to go ahead and apply for your loan through them.
If I were to buy a house (DH and I will look into it in about 5 years) then I would go through a broker.

ETA: Yes, you'll also need to pay legal/conveyancing fees. These can be $1,000-$3,000.

how do they expect us to save for a deposit? seriously lol

I know, Jess, these are rough times for saving. Quite a few of our clients are using family equity. You get an 80% LVR loan on the new house you buy, then you get another loan for the balance secured by both the new property and your parents' property. (Of course this is if your parents are agreeable, and the bank specifies that they have to receive independent legal advice. Plus, they need to have enough equity in their property to be able to help you out of course.)

I think its a bit too easy to get a mortgage at the moment... and i think it might lead people in to a false sense of security, because if they can only just afford repayments now with rates so low, what happens when they go back up??

When we bought our house we left a fair bit of room in the budget to account for rate rises, and bam, within the first 3 months there were a whole bunch of increases, lucky for us it was only about $50 a 1/4 percent, so ended up being a few hundred dollars more a month.

I guess banks figure if you can't save a deposit how will you pay more when interest rates go up?

The banks work out if you can service the loan repayments by using a higher interest rate than what it currently is to assess you (the assessment rate).

and also, i was under the impression you could change from a variable rate to a fixed rate. so we will be on variable (cause ppl have said there will be some more decreases) and then at the first sign of an increase we will change it to fixed. is this scenario correct? (i hope so).

I think the best way to find out is talk to a mortgage broker - it won't cost you anything and it will let you know where you stand. Also it is getting harder to get a loan with one of the major four banks, but there are still plenty of competitive reputive smaller lenders out there like bank west, INGDirect, IMB, etc who may find you servicable.

Timely thread! We are getting together paperwork for pre-approval, but I am getting more depressed about our chances as time goes by. We are both self-employed which already makes it hard, and we have 10% of the deposit between our savings, money owed to us and some other money we can lend- so its not like its just sitting in our bank account. And our savings history is bad for the last few months as Jan/Feb is always a slow business time.

Man....when I write it all out, it sounds terrible even though we actually should be above to afford repayments....should we even bother applying?!!!

We're never going to get a house!! :(

Hollo: Yup, you can apply to switch to a fixed rate loan. You may have to pay a fee - depends on your lender. Usually you can fix the rate for a max of 5 years.
Jessica: Yes, it is harder when you are self-employed. But sure, it's worth applying - at least you know where you stand, and if they do decline your application they will give you reasons and you can hopefully work around those for next time, KWIM? And like misty said, there are other lenders who may be slightly more flexible in their assessment of you, but sometimes they are slightly more expensive - more fees and slightly higher rate... In any case, it is worth checking out if you're really desperate to get into the market.
I understand your frustration - DH and I are in a position where we'll just not be able to buy for several years yet.

If you are wanting to meet with a bank ive been told you are better off making an appointment with a mobile banker instead of just walking into a bank, they tend to be more helpful =)