When Is It Cheaper to Pay for Mortgage Insurance than Save a Larger Deposit?
A home purchase is an investment for the homeowner. For the lender who finances the purchase, it’s a risk. The average home price in Australia starts at $700,000. This equals a $140,000 deposit. Australia has seen several changes in the economy and workforce, and the younger generations are having trouble saving for their deposit.
The good news is that mortgage insurance brings down the barriers of entry into the property market.
Several real estate insiders and the Australian government believe young adults benefit from becoming homeowners as soon as possible. The mortgage insurance fee is negligible when property values increase the way they have been.
In cases when paying the mortgage insurance allows an individual to become a homeowner sooner through mortgage choice options, it makes sense to incur the fee than save for a large deposit.
Mortgage Insurance Conclusion
Instances when it’s best to pay the private mortgage insurance fee do exist. Today’s young generation is having a tougher time saving $140,000 for a deposit on their future home. So, alternatives exist. For more information about mortgage insurance and workarounds, contact our loan specialists at Mortgage House.