South Australian homebuyers are paying close to double the sticker price of their home in hidden costs over the 30-year life of their loan, as extraordinary new figures reveal the true cost to buyers taking advantage of the Government’s First Home Guarantee Scheme.
New Finder.com.au data shows over the life of their 20-per cent deposit loan – assuming they don’t make extra repayments – a buyers’ median-priced Adelaide house of $864,250 ends up costing them a whopping $1,615,913 after they’ve paid a massive $751,663 in interest and another $433,830 in stamp duty.
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Unit buyers end up paying close to double too, their $600,000 home costing $1,121,837 by the time they’ve paid their $521,837 in interest.
The data assumes a 20-per cent deposit 30-year loan at an average interest rate of 5.69 per cent for a first homebuyer of an established home to be their primary place of residence.
Finder home loans expert Richard Whitten said underestimating the true costs of housing will lead to some borrowers overstretching themselves.
Finder Home Loans expert Richard Whitten
“I think transparency and education about the lifetime costs of home buying is very important,” he said.
“If more people understand this they may try to borrow less, get a bigger deposit or set their sights on a smaller, cheaper home – but it hasn’t happened yet.”
The data shows median-priced houses in SA’s most expensive suburb – the $3.29m Medindie – end up costing more than $6.326m after 30 years at a 20 per cent deposit, and almost $6.684m with a 10 per cent deposit.
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At the other end of the spectrum, the state’s cheapest properties – Andamooka units at $65,000 – will end up costing you $123,137 with a 20 per cent deposit, and $130,204 with a 10 per cent deposit.
For those considering taking advantage of the Government’s First Home Guarantee Scheme with its 5 per cent deposit, Finder data shows buyers of a median-priced Adelaide house – $864,250 – will pay $892,600 in interest over the life of their 30-year loan – more than the value of their home – taking the total cost up to $1.75685m and a whopping $140,937 more than were they to have bought with a 20 per cent deposit.
Unit purchasers buying a $600,000 unit end up paying $619,681 under the scheme – $97,844 more than if buying with a 20 per cent deposit – taking the total to more than $1.2m.
Blackfish Finance founder Leah Busby.
Blackfish Finance founder Leah Busby said there were pros and cons to the scheme.
“If people had waited to get into the market with a 20 per cent deposit plus fees, by the time they’d saved that up their home would probably have gone up by more than $100,000, so there are definitely pros and cons to it,” she said.
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“And there was already a solution for people with a low deposit in that people have been using a family guarantee for years.”
She said buyers should endeavour to pay off their loan as quickly as possible.
“Create a habit early, even $50 a month makes a big difference, and offset accounts and redraws can all help to take years off of your home loan,” she said.
Shaba DC is currently building her own home and hoping to pay it off in 15 years. Image/Russell Millard Photography
Parabroker Shaba DC, 32, is about to start building in Morphettville and said she planned to pay off her home as quickly as possible.
“I plan to use multiple offset accounts, and changing my banking for my salary and those day-to-day transactions to those offset accounts to pay it off quicker,” she said.
“My hope is to pay it off in 15 years,” she said.
– with Aidan Devine
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