How to get creative with your first home purchase

We have all seen the headlines; housing is becoming increasingly unaffordable and out-of-reach for the younger generation.  But there are creative ways you can get on the property ladder.

The graph below shows how there is increasingly a gap between home prices and how much people can borrow.  As a result, Australian are increasingly using innovative means to plug the gap.

One way is through the ‘Bank of Mum and Dad’, research from the Australian Housing and Research Institute found that 40 per cent of 25–34-year-olds expect their parents to step in to help them achieve their goal.

And the banks understand how important this can be, with some very accommodating of gifts or loans made by parents.

But there are other ways too.

A couple of banks have special loans aimed at helping friends who want to buy a property together but who want their own individual loans.

And these loans can be used creatively too – I have just recommended this structure to a mother and adult daughter who are looking to buy together.

However, in cases like this it’s worth investing time and money into a solicitor who will be able to give them iron-clad advice on how to safeguard funds – taking into account inheritance questions and siblings.

Superannuation

The First Home Super Saver (FHSS) scheme allows you to save money for your first home in your super fund.

The scheme allows you to make voluntary contributions into your super fund to save for your first home.

You can apply to have a maximum of $15,000 of your voluntary contributions from any one financial year included up to a total of $50,000 contributions across all years.  But these contributions have to be in addition to your regular Super Guarantee payments.

First Home Owners Grant

The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Government initiative to support eligible home buyers to buy a home sooner.

For the FHBG, any Guarantee of a home loan is for up to a maximum amount of 15 per cent of the value of the property.

This year, 35, 000 FHBG places have been made available – but not every bank participates in the scheme.  So, please contact me to understand better how it might apply to you.

Buying a properties these days is hard for first-time buyers – who are having to resort to increasingly creative measures.  Some (though not all) banks are very flexible with these types of borrowers.  If you want to know more, please contact me on 02 9922 5055.