Navigating the property market can be a daunting task, especially for first-time homebuyers who are often faced with the challenge of saving for a substantial deposit while managing current living expenses. However, a recent announcement from the Commonwealth Bank (CBA) could be the lifeline many aspiring homeowners need.
The major bank’s innovative approach could significantly boost the income and borrowing power of first-home buyers, making the dream of homeownership more attainable. This information is valuable, so if you know someone who is looking to buy their first home, be sure to share it with them.
In a move that’s being hailed as a ‘game changer,’ CBA has confirmed that it will now allow first-time homebuyers to rent out a room and count the rental income toward their home loan repayments.
CBA’s rental income policy permits customers to count up to $150 per week in rental income when assessing their ability to service a home loan, with a maximum of one renter permitted under the bank’s revised policy.
It’s a strategic move that acknowledges the evolving needs of homebuyers in today’s market.
‘At Commonwealth Bank, we are constantly reviewing and monitoring our home loan policies and processes to see how we can best meet our customers’ home buying needs while maintaining our prudent lending standards,’ a CBA spokesperson stated, emphasising the bank’s commitment to responsible lending while adapting to the changing landscape of property ownership.
This policy is not just a win for individual buyers; it’s a reflection of broader changes in the property market. For instance, Queensland has recently updated its rules to allow buyers to rent out a room while still being eligible for first-home owner grants and stamp duty concessions. This shift recognises the importance of flexibility in helping Australians achieve their property goals.
Eligibility for this new option from CBA extends to a variety of customers, including those with guarantors, those claiming First Homeowner Grants, or those participating in a Home Guarantee scheme. The bank specifies that the home loan must be for personal use, such as for owner-occupiers or refinancers, and not for investment purposes.
George Samios, an expert in the mortgage broking industry, says this initiative is already ‘generating a massive response’ and could be a ‘game changer’ for first-home buyers.
‘This move will mean that many people can rent a room to a family member or friend and purchase a home when before they may not have met eligibility criteria,’ he explained.
The financial implications are significant. Samios points out that the additional rental income could allow some buyers to borrow around $50,000 more. This increase in borrowing capacity could be the difference between settling for a less-than-ideal home and securing the property they truly desire.
‘Think about this—in some cases, you now can pay zero stamp duty, access the first home buyer grant, and access up to $650 per month income towards your mortgage,’ he added, painting a picture of the potential financial benefits.
Given the competitive nature of the current home loan market, it’s anticipated that other banks may follow CBA’s lead. This could signal a broader industry shift towards more flexible lending criteria that take into account the diverse income streams and living arrangements of modern Australians.
For our readers over 50 who are considering helping their children or grandchildren step onto the property ladder, this development could be particularly relevant.
We’d love to hear your thoughts on this new policy. Have you or someone you know been in a position where renting out a room could have made all the difference in securing a home loan? Do you think other banks should adopt similar policies? Share your experiences and insights with the YourLifeChoices community in the comments below.
Also read: Helping seniors downsize: Nationals leader pushes for stamp duty reform
