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Brokers in South Australia can provide an extra option for first home buyers, as long as they have a qualification.
Having recently taken a paper to Washington to explain why education can be used as a predictor of home loan success, state-backed lender HomeStart is encouraging brokers to understand the ins and outs of its loans options.
It also wants to raise awareness that not all first home buyers look the same, as the average age of people buying their first home rises higher.
In the early 2000s the lender wanted to tackle the growing number of South Australians leaving the state. It introduced a home loan for degree graduates with as little as a 3% deposit.
In response to its success it opened the product up to TAFE graduates and in 2015, to those with certificate 3.
Deborah Dickson, head of retail at HomeStart Finance, said, “In South Australia we really need to retain and grow our population. We’re already a small business state in many ways and that’s admirable, but we also need to make sure those small businesses are able to grow and they can attract and retain people here too.”
She said the loan was about “taking a punt on an individual”, assuming their level of education would allow them to earn more in the future and be less likely to lose work.
She added, “I do think it’s a combination of both their determination in having a qualification but also that propensity to become employed and stay employed and earn more over time relative to people who don’t have qualifications.”
For brokers, Dickson said, “If they’ve got someone who they think is a first time buyer and has a qualification, they’re perfect for the graduate loan. They only need a 3% deposit.
“We’re looking for evidence of that qualification obviously, but generally this product fits a wide section of people because it does apply to not just university graduates but to those who graduated from TAFE. So it’s very broad.”
HomeStart specialises in getting first home buyers into property, but once the borrower has built up equity they can move on to a lender with more competitive rates.
Dickson said it is not just first home buyers and the possibility to help these borrowers refinance later on is important for brokers.
She said, “The opportunity is there for brokers when they understand the nature of the HomeStart product and the kind of audiences that we can cater for. It’s not just first time buyers, we also do a lot of business for people leaving broken relationships who need to retain a family home and security for their children.
“So once they understand the sorts of audiences we can help, they really see that we serve a purpose for a point in time. They can help people to get in and then later on they can service them for the long term and build that relationship with their customers.”
