Property prices are stabilising across Australia’s major cities and many people are being told that now is a great time to be a buyer, but that may not be very helpful for those who are still struggling to get a foothold on the property ladder.
Even with conditions starting to favour buyers, property prices are still high in Sydney and Melbourne and saving for a deposit for a house is no easy feat.
But even if property prices are too high where you live, there are a number of things you can do to help get into the property market as quickly as possible.
Take out LMI
If you’re keen to buy a property but haven’t saved a 20% deposit yet, then Lender’s Mortgage Insurance (LMI) may be a good option for you.
LMI is a premium added on top of your mortgage payment to protect your lender in case you can’t make repayments and it can be paid as a one-off sum when you take out your mortgage, or added to your loan repayments.
Having to pay an extra fee when buying a home certainly sounds like something you would want to avoid, but it also means that buyers can get into the market sooner than they might otherwise be able to, with LMI allowing some buyers to get into the market with as little as 5% deposit.
Use a Guarantor
If you’re not keen on the idea of taking out LMI, or you haven’t got a big deposit saved, then a guarantor may help you secure a home loan.
A guarantor is someone who will assume responsibility should you not be able to make payments on your loan, which helps reduce the risk for the lender.
Being a guarantor is a big responsibility and therefore it’s not something that people will do lightly. In many cases it will be a parent or guardian who is willing to take on the financial burden on behalf of the borrower should things go awry.
Become a rent-vester
Can’t afford where you live? Consider buying in a more affordable area (one that is tipped for growth) while you continue to rent. While most people like the idea of buying a home to live in, an investment property can be a great way to get into the property market and build equity for a future home.
Find ways to save
You will have a lot more property options if you have more money stashed away in the bank.
Everybody’s financial situation is different, but if you look at your main expenditures you might be able to find ways to cut back.
A few ideas might include getting rid of credit cards, paying down debt or simply giving up month-to-month subscriptions to things like the gym or streaming services.