Looking to buy a home, but don’t have the full deposit - there are options
Let’s face it, saving the deposit for a home can be hard when you are paying rent, and sometimes ‘life happens’. Can you achieve home ownership without the need for a full deposit? The short answer is yes, there are options – when buying a home there are 3 things that you need to bear in mind – the purchase costs, moving costs, and the deposit.
Purchase costs – if you are a first home buyer and the property being purchased is under the relevant state limits for the property value you may be eligible for stamp duty concessions, or even waiver. This means that depending on your solicitor or conveyancer your purchase costs are generally under $4,000 (but please check this with your professional adviser in this area). You will need to insure the property and depending on the build, location and so on this cost will vary, so talk to an insurance broker for assistance.
Moving costs – this is not only the cost of a removalist (if you cannot make the move yourself), but also any accommodation and meals while moving, getting services connected, gifts for your friends for helping you move, and so on.
The deposit – and this is usually the harder point. The ideal is for you to have a minimum of 20% of the purchase price, but as we said above this is not always possible, and the options are: -
First Home Loan Deposit Scheme
This is a Federal Government initiative that is available to assist first home buyers into their own home. Generally speaking you need a minimum deposit of 5% (plus the costs above) and it needs to be genuine savings to be eligible.
The government has appointed a range of lenders to provide loans under the scheme. Placements are being offered each six months – 1 January and 1 July and while there are no guarantees about future places and numbers the last 2 releases have allowed for 10,000 loans.
There are other eligibility criteria and feel free to give us a call to arrange a meeting to discuss these.
Lenders Mortgage Insurance
Again if you have a minimum of 5% plus costs (and often enough money to cover the cost of the insurance) you may be eligible for Lenders Mortgage Insurance (LMI). LMI is an insurance policy that you purchase to protect the lender to allow them to lend more than 80% of the value of the property.
Costs and premiums vary between lenders so again, arrange an appointment to go through the various choices.
Not quite the “Bank of Dad & Mum”, but nearly the next best thing. An eligible family member provides a mortgage over a property that has sufficient equity to make up the 20% deposit. Eligibility differs between lenders, as does the loan structures.
For full details, call us for a chat.
Photo Credit: Ken Teegardin