Zero deposit for first home buyers a win-win scenario

LET’S turn over the old-style home financing that seems to be impractical. I am thinking about the need for 20 per cent of home price as a deposit.

Do we need to apply a 100year-old principle of financing in the 21st century?

Why not waive the 10 or 20 per cent deposit for first home buyers looking to finance a new home and just make them stump up for the direct cost of finance lenders including stamp fees?

Most folk renting are now paying out somewhere between $21,000 and $31,000 per annum in rent, that amount will undoubtedly be in the ballpark of repayments on a mortgage for a home between $350,000 and $450,000.

As most homeowners do not remain in the same home for the length of the contract and when the owner up or downgrades according to their needs the financial institutions will be able to double up on the same property.

There must be added protection for the lender, and I suggest that the contract include a clause that the borrower, should he/she break the contract without the lender’s agreement, be blacklisted for receiving a loan for anything. Applying this contractual condition would demonstrate to the purchaser their obligation and duty for the acceptance of paying no deposit.

A term like this and explained in detail when signing mortgage document to the borrower should minimise that fly-by-nighter witnessed in the rental market.

The long-term advantage is that implementing no deposit to those who qualify will be a boom to the housing industry and free up many rental properties over time. The lender retains protection as it holds the mortgage over the property while all purchasing costs for the property are paid upfront.

There will be negatives to this idea, but surely these can be worked through and when fairly applied will increase homeownership for Australians.

This scheme should only be open to citizens and not residents as I believe being a citizen should have benefits not available to non-citizens.

ROBERT S BUICK, MOUNTAIN CREEK