How first home buyers could slash their repayments by $1800 a month

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Cutting down on monthly mortgage repayments might sound appealing after a string of interest rate rises, but it does come with a trade-off later.

A Melbourne buyer could save $1626 while in Perth, they could save $1219 per month.First home buyers struggling to afford a property could soon take advantage of two types of federal government help, but one will offer lower mortgage repayments and the other promises better capital growth over time.

Buyers who co-purchase with the government and get a smaller loan would save as much as $1829 on their monthly repayments, Canstar modelling shows. After 10 years, the homeowner who co-purchased with the government would have $592,294 in equity compared to the $831,362 they would have had if they bought without.

“I think buyers will go into this clear eyed. They’ve got to,” he said. “You’ve got to say to yourself: OK this gets me into the property I want now, repayments I can afford now and a toehold into the property market. But the time will come when I will sell or up-trade and I won’t have the money I would have otherwise.”

“If you get through to the full 30 years … you would see the split between you and the government hold true.Independent economist Saul Eslake said the scheme should be effective, “provided [first home buyers] don’t end up buying a more expensive house” than they otherwise could afford. He said if buyers used it to up their purchasing power, it would continue to destabilise the property market.

 

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