Wishful first home buyer’s are in a challenging position at the moment. With record low interest rates making repayments on a home loan comparable to rent, many are simply in no position to step up onto the property ladder with their first home purchase. Government grants for established homes no longer exist, and tougher lending policies with a requirement for genuine deposit savings putting the home ownership dream seemingly out of reach for the first home buyer.
Saving the deposit seems to be the biggest concern and hurdle for many first home buyer hopefuls that I’ve spoken with. I can certainly appreciate how difficult it can be to save whilst having to pay rent at the same time, and the size of the deposit needed has been going up along with property price rises.
Quite a few first home buyer clients of mine have been fortunate enough to receive financial assistance from parents via a cash gift to get them over the line, however not everyone has cashed-up and willing parents to help out, so this is simply not an available option for many.
In the absence of cash, I have successfully arranged finance for first home buyer’s under ‘guarantor support’ policies, which many lenders make available. Guarantor support allows parents to help their children enter the market by mortgaging their own property as additional security for their children’s new home loan. Guarantor support can also assist customers to borrow more funds than what they may have otherwise been eligible for. The savings in Lenders Mortgage Insurance under this arrangement also saves many thousands of dollars.
Another solution is Property Share, which allows multiple borrowers to share the deposit and purchase one property using separate loan facilities with each borrower having their own loan amount, loan type, duration and payment structure that best suits their own requirements. This is ideal for first home buyers looking to get into the housing market and buy property with family or friends.
Both Guarantor Support and Property Share can also enable eligible first home buyer’s to purchase a more suitable property than settling for less attractive accommodation, avoiding the need to “upsize” in the future at a considerable expense.
So there are some innovative solutions out there to help first home buyer’s realise their dreams, however if none of these options are available, at the end of the day it’s just a case of needing to know where they’ve got to be in respect to the amount of deposit required, and setting some savings goals focused on achieving that dollar target.
I specialise in helping first home buyer’s enter the market, and would like to hear from any first home buyer hopefuls who may like some smart mortgage advice with an obligation free assessment of where they need to be to get into their first home, or to discuss the Guarantor Support of Property Share options in more detail.