Are you frustrated with how difficult it is to get into the property market as a first home buyer? If traditional methods of buying a home haven’t worked out for you, you might consider these ideas to get into the market sooner.
Rent to own
Renting to own is becoming more common in Australia and may be a great way for first home buyers to get into the market. Essentially, you rent a property just like you would any other. However, these schemes give you an option to buy the property after a set amount of time. The timeframe is usually 3-5 years.
Rent to own schemes often feature higher rent, with the additional payment (an ‘option-to-buy fee’) basically adding up to a deposit on the home when the time comes to buy. While these schemes are appealing, you should always do your due diligence and consider every term and condition, because they can be complex and risky for the uninformed.
Many people are considering shared ownership as a way to get into the property market. This idea involves purchasing a house with one or more other people, and sharing it equally. Of course, this can come with complications, especially if you intend to all live together in the home. But you may have friends who are keen to invest in property. They may contribute something to the deposit and mortgage, with a view of getting their percentage back when you sell.
The benefit of this is you can show a considerably higher capacity when applying for a home loan, assuming all your parties have good financial circumstances. If you choose this method, you may want to consider seeking legal advice to keep a record of each person’s share of the contribution and ownership.
Many people ask their parents to help them buy their first home. While not everybody has that luxury, it’s something that’s worth exploring if you do. There are multiple ways you can seek parental assistance.
Firstly, you could ask them to act as a guarantor for a home loan. This means some of the responsibility falls on them if you default on payments. Banks and lenders are becoming less inclined to offer this, however.
Secondly, you could co-purchase the property with your parents. Even if this is in name only and you still handle the payments, having your parents’ financial situation considered during the loan process can be helpful.
Alternatively, if they have the means, your parents may be able to lend you money for a deposit.
Re-evaluate your ideal location
It’s understandable to have an ideal location that you want to buy or build in. However, unfortunately, certain areas are more expensive than others. For first home buyers or homebuilders, it can be difficult to get finance for those more expensive locations.
That’s why you may need to make a choice. Do you want to spend more time renting, trying to save a higher deposit and improve your financial position to buy in your ideal location at a later date? Or, do you want to get into the housing market earlier, but perhaps in a less-expensive location?
You can always plan for that ideal location in the future, but to get into the market sooner, it may be worth reassessing your expectations.
Speak to a broker to find suitable options
If you’ve tried to obtain home loan finance and been rejected in the past, it can be quite disheartening. However, one rejection doesn’t mean you can never get a mortgage. There are actually plenty of different home loan products out there, and a broker is best-placed to find these options for you.
Talk to a broker, share your financial circumstances, and discuss your goals. This way, a broker can search for the right home loan options. They’ll even know which ones you’re likely to be successful with.
How BrokerCo can help
BrokerCo are your online mortgage brokers who offer a truly professional service. More than just a comparison site, we connect you with a real mortgage broker who works closely with you. We’ll work to understand your individual circumstances and needs, and find the best home loan products on the market. We can even help you with the application, and the process of making house offers. For professional mortgage brokers who care, contact the team at BrokerCo today.