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Great Southern Bank will now offer 40-year loan terms on home loans for FHBs. This product allows for lower monthly repayments. This is reportedly one of the few longer-term loan products in the market.
According to research from Great Southern Bank, 29 per cent of Gen Z and Millennials and 19 per cent of Gen X expressed interest in 40-year home loans if it meant they could make lower monthly repayments.
The loan is available for borrowers aged 18–40 years old. It is only offered to owner-occupiers and can be used to purchase a new or existing home or construction of a new home, where it includes refinance or purchase of a land loan.
The max loan-to-value ratio (LVR) is 90 per cent. Great Southern Bank noted that the longer term could result in larger overall repayments over the life of the loan.
According to Mortgage Success general manager Emerald Rowlands-Sierra, the introduction of the longer-term loan will be welcome among first home buyers.
“There are times when single applicants may hesitate due to income repayment concerns, so lower repayments will help them feel more comfortable taking that next step. The other longer-term loans that I’m aware of are from third tier lenders, which are potentially more expensive,” she said.
Rolf Stromsoe, chief customer officer at Great Southern Bank, said the lower repayments could mean the difference between renting and purchasing.
“This could be their ‘starter home loan’ – exactly what they need to get their foot in the door at the beginnings of their home ownership journey,” said Stromsoe.
“As their needs evolve and their earnings capacity changes, they may refinance any number of times – but this is the loan that can start it all.”
[Related: Expanded Home Guarantee Scheme to double first home buyer choice]
