Find out if you are eligible for government grants or concessions:
For example, the First Home Owner Grant is a national scheme funded by the Federal Government that can help first time buyers get onto the property ladder sooner. The amount available varies by state and ranges from $5,000 up to $25,000 for first home buyers towards the purchase of their first home.
Consider Lenders Mortgage Insurance (LMI):
As a borrower, if you do not have a deposit of at least 20%, you can be forced to pay LMI. This insures your lender, protecting them against any loss incurred if you default on your loan. While LMI does not protect you as the borrower, it can potentially help you purchase property sooner if you have a smaller deposit. However, it is important to weigh up your options carefully and consider whether or not it is right to pay LMI and jump in now, or hold off, watch the property market and save a larger deposit.
Buying with others:
If you're struggling to put aside enough money each month to save a deposit for your first home, you could consider pooling your money with others, be it a partner, friend or family member. Combining your funds will not only give you a bigger deposit, it may also increase your borrowing power and help you secure a home loan that meets your needs.
Of course, if you decide to go down the path of co-ownership, it's important to seek legal counsel as this will help you to address all the important issues upfront, such as what would happen if one person sold their share or defaulted on their mortgage.
Let your mortgage broker do the legwork: Choosing the right home loan is an extremely important part of the home buying process. At no cost to you, a broker can walk you through the mortgage minefield and help you find the right home loan for your needs - often saving you a great deal of time and money.
Get ahead with pre-approval:
Before hitting the pavement in search of your new home, consider getting pre-approval. This will give you a good idea of your borrowing capacity and save you from looking at properties that aren't in your price range. Contact your local mortgage broker to obtain home loan pre-approval.
*Stephen is the owner of Mortgage Choice, Ballarat.