If you’re having trouble saving enough money to buy your first home, maybe there’s another way…
You’ve been working for a while now and earn a good income. But between paying off your HELP debt, meeting your rent and having the odd weekend away (to attend yet another wedding), you’re finding it hard to save your house deposit.
Everything you read says you’re supposed to have 20% deposit and as house prices continue to rise, with each passing month that elusive 20% target seems to get further and further out of reach.
But don’t panic just yet. We’re here to tell you there’s a few ways to buy your first home without needing to have a large cash deposit.
Here they are:
Family Guarantee Loan
Whilst a family guarantee loan isn’t suitable for everyone, because it reduces the amount of cash you need to save, it can help you to buy your first home sooner than you thought. Find out more about family guarantee loans here.
Family Assistance
Here, we’re talking about a monetary gift (generally from your parents) that increases the cash y you can contribute towards a purchase . For a lender to consider these funds when assessing your loan application, you generally need to have a signed statement declaring the funds were provided as a gift only and in no way constitute a loan.
There can be some legal implications you may want to look into, but this type of family assistance is another way to get into your first home sooner.
Pay Lenders Mortgage Insurance
You don’t actually need to save 20% deposit. It’s just that when if you borrow more than 80% of the purchase price/property value, a lender is likely to charge you Lenders Mortgage Insurance.
Lenders Mortgage Insurance does increase the costs. However, if it allows you to buy your first home now rather than live with your parents for the next 5 years – only to discover in 5 years that house prices have gone up further and you’re still short your 20% deposit – paying Lenders Mortgage Insurance can be a good option.
Buy an investment property first
Whilst the dream is to move into the house you buy, would you consider buying your first property as an investment? Depending on your current living situation, some first time buyers find that purchasing an investment property first can be a good option. Buy a property, use the rent to help cover loan repayments and hopefully the market will do the rest.
Over time, you’re hoping the value of this rental property increases and you can use the built up equity for your next purchase. Alternatively, there’s always the option to move into the property yourself at a later date.
Buy property with a family member
Buying property with a family member means you only need to save half a deposit, pay half the mortgage and cover half of the bills. Sounds pretty good, right? Whilst it can introduce complications, in the right circumstances it’s a good strategy that can help you buy that home you’re so keen to get into.
