Home loan interest rates are at historical lows today, but many first home buyers are still having a difficult time getting their foot on the property ladder. Key factors are skyrocketing house prices and the time it takes to save a deposit.
If you find yourself in this predicament, there are still some affordable options you can explore so you can buy your first home.
Buying off-the-plan can be a cheaper alternative than buying an established home because the only upfront cost you need to pay for is the deposit. There are no mortgage repayments to worry about initially, so you have more time to financially prepare yourself before the home is completed. Some states even offer stamp duty concessions on new properties, so this could help you even more financially.
However, there are risks involved such as the builder going bankrupt, delayed construction, the property value increasing and the builder cancelling the contract. It is also possible that your expectations may not be met since you were not able to see the property physically before buying.
2. Buy with someone else
You can share the deposit, the mortgage repayments, and other fees involved like conveyancing fees and stamp duty when you buy with someone else. It could be with your spouse, a friend or your partner.
However, if you’re considering doing this and you’re not married, there are two ownership options to choose from. They are Tenants in Common where you both agree to own a portion of the property that can be 50/50 or 70/30 and Joint Tenants where both of you own the whole property equally.
Rentvesting is where you rent the property you want live in and buy an investment property elsewhere that’s more affordable. Basically, you’re renting your preferred home and buying a home located in an area where it’s cheaper.
This strategy can be used when you want to enter the real estate market quickly. You have the opportunity to earn extra income, there are tax benefits, and you have the option to live where you want.
While this sounds like a good option, there are also drawbacks to rentvesting. Among other things, if you don't move into the property immediately you may miss out on the First Home Owner Grant.
These are just a few of the ways you can get yourself onto the property ladder. To get started in buying your first house, you can also check out our home loan products.