The home at 103 Bagot Rd, Ludmilla, is under offer after being listed for sale for $549,000. Picture: realestate.com.au
The real cost of homeownership in Darwin has been revealed with new data showing buyers will need to fork out almost double their purchase price over a 30-year loan once interest is factored in.
The analysis by financial experts Finder found homeowners buying with a 20 per cent deposit would pay almost 90 per cent more than the contract price over the life of their loan,
For those using a 5 per cent deposit, that figure was more than 100 per cent.
Using a $599,999 house price and an interest rate of 5.69 per cent, Darwin buyers with a 20 per cent deposit will pay almost $521,836 in interest over a 30-year loan.
With a 5 per cent deposit, the same buyer will pay $97,844 extra in interest.
Using a $400,000 unit price, a buyer will pay $347,891 in interest on a 30-year loan with a 20 per cent deposit and $65,230 more with a 5 per cent deposit.
RELATED: Tsunami-safe home hits market
Darwin’s top earning spots post Y2K
$175k handout: Aus bank does unthinkable
Finder.com.au home loans expert, Richard Whitten. Picture: Supplied
Finder home loans expert, Richard Whitten said new buyer almost certainly underestimated the long-term costs of homeownership.
“It’s basically impossible to fully map them out,” he said.
“Interest charges on the home loan are massive, home insurance premiums have risen sharply in recent years, then there’s strata, maintenance and repairs, upgrades, the list is endless.
“But the upsides are really positive.
“Paying off the loan principal builds up your wealth, and the property value will most likely grow over time.
“If you can pay the loan off faster those interest costs drop (and) once the loan is paid off you’re in a substantially better position than a renter.”
Mr Whitten said transparency and education about the lifetime costs of home buying was important, but it may not change buyer behaviour.
“If more people understand this, they may try to borrow less, get a bigger deposit or set their sights on a smaller, cheaper home,” he said.
“But it hasn’t happened yet.”
The property at 156 Beddington Rd, Herbert, is for sale for $525,000. Picture: realestate.com.au
Mr Whitten said when it came to the 5 per cent deposit scheme, the benefit was in allowing buyers to get a foot in the door before price rose any further.
“The scheme is pretty helpful for someone who is ready to buy now and has a smaller deposit,” he said.
“It saves you a good chunk of money and helps you enter the market.
“The big saving with the First Home Guarantee Scheme is avoiding that lenders mortgage insurance premium.
“Right off the bat this saves a borrower potentially ten, fifteen, even twenty thousand dollars.”
Mr Whitten said the downside was the extra cost of borrowing 80 per cent of a property’s value versus 95 per cent.
“Buying a house with a very small deposit is riskier,” he said.
“You borrow more and therefore pay more interest.
“You’re also more vulnerable if prices fall: you don’t own much of your own house to start with.
“This makes it trickier to sell the property or refinance the loan until you repay a fair bit of the loan.
“This is less of a problem if you’re planning to stay in the home for years and you stay on top of your mortgage.”
Darren Hunt of Real Estate Central Projects. Picture: Supplied
Mr Whitten said the long term cost of the scheme would be felt by future buyers.
“The scheme makes it a little cheaper for buyers today, but this will help create more demand and drive prices up,” he said.
“It’s kicking the housing affordability can down the road for the next generation once again.”
Darren Hunt of Darwin’s Real Estate Central Projects said while the First Home Guarantee Scheme was good in theory, the $600,000 cap for NT buyers meant few, if any, local first time purchasers could make use of it.
“Houses for sale under $600,000 are few and far between,” he said.
“There are city and suburban apartments that you can buy, but any houses under $600,000 are sold within one or two phone calls, bought sight unseen by interstate investors.
“First homebuyers are being pushed out of the market.”
The experienced agent said the local real estate industry was pushing for the FHGS cap to be increased in the NT.
“It’s absurd,” he said.
“Darwin is the best performing market in country right now, so (the cap) should be relative where we sit.
“We’ve lobbied for local NT Government to make submission to the Federal Government to increase the cap.
“We’ve yet to see results.”
English (US) · 