Commonwealth Bank Announces $33,000 Home Loan Adjustment for Australians: ‘Reduced Deposits’

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Commonwealth Bank Steps Up Support for Home Builders with Increased LVR

Commonwealth Bank of Australia (CBA), the nation’s largest bank, is set to enhance accessibility for Australian home builders by adjusting its loan-to-value ratio (LVR) for construction loans. Effective May 24, the bank will raise the maximum LVRs to 95% for properties valued under $3 million and 80% for those valued between $3 million and $6 million.

Current policies allow CBA customers to secure loans with a maximum LVR of 90% for properties under the $3 million threshold and 75% for those within the $3-$5 million range. This change signifies not only an increase in financial accessibility but also an expansion of the maximum security on loans in the higher range.

Dr Michael Baumann, CBA’s executive general manager of home buying, highlighted the bank’s commitment to aiding Australians in achieving home ownership. He stated, “Our expanded construction loan policy is aimed at creating more opportunities for individuals interested in constructing their homes sooner by facilitating access to financing with reduced deposit requirements.”

According to data from the Australian Bureau of Statistics, the average construction loan for new builds in the December quarter was approximately $674,649. Under the previous guideline of a 10% deposit, prospective borrowers would need to contribute around $67,475 upfront. However, with the new policy, a 5% deposit lowers that requirement to about $33,732. This significant reduction is expected to make home ownership more achievable for many Australians.

In addition, CBA has recently made strides in its home loan policies, including options tailored for prefabricated homes. These homes are built off-site in a factory environment and then moved to their final locations, offering a more cost-effective alternative to traditional construction methods. Baumann noted that financing for prefabricated homes has been challenging in Australia, but the updated policies now allow customers to access progress payments before the property is situated on land—enabling greater financial flexibility during the construction process.

Furthermore, CBA has simplified its serviceability assessments by removing Higher Education Loan Program (HELP) debts from evaluations if they are expected to be settled within a year. Other innovative changes permit first home buyers to rent out a room and utilise the rental income to assist in servicing their home loans, allowing customers to factor in up to $150 weekly from a single renter.

In a landscape where home ownership remains a prized goal for many Australians, these updates from Commonwealth Bank signify a proactive approach to not only easing the financial burden for new builders but also enriching the available options for those looking to enter the property market.

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