Cash poor, asset poor and keen to own your own home?


Buying your first home is one of the most exciting milestones of your life, and you will always remember the day you turned that key in the lock, opened the door, and stepped inside. But it’s also a challenging time for many buyers, especially if you’re low on cash and low on other assets. It can sometimes feel as if you’ll be saving forever to raise your deposit, or that it will be impossible to secure finance until you’re wealthy enough to not need it.

But it’s not impossible to secure finance, and you won’t need to keep saving forever. Here are a few approaches you can take to get into your first home sooner.

1. Ask for help with the deposit

Property prices in most major Australian cities have consistently risen faster than wages over the last decade. So it should come as no surprise that the current generation of first home buyers is finding it increasingly difficult to get into the market. That’s why so many parents are helping their children with a 10% deposit as an equity redraw out of their home or from their own savings. It’s a smart way to share their wealth—they’ll see their kids reap the benefits of getting into the property market sooner rather than later, setting them up for a richer life. Don’t be shy about asking your parents to help you with a deposit to buy your first home.

2. Buy yourself time to save with a deposit bond

If your parents aren’t in a position to help you with a deposit, they might still be able to help you secure a property at today’s market prices. Using the equity in their home as security—and without redrawing on their home loan—they can act as guarantor on a deposit bond. A deposit bond means you won’t need to pay your 10% deposit until settlement day, allowing you time to save while your home is being built. (Be sure to check with the developer that they’ll accept a deposit bond.)

3. Find a guarantor to co-sign your loan

Another way your parents can help out is as guarantor on a home loan on an apartment that’s already complete. A mortgage broker will guide you through the process of securing a loan with your parents’ home equity, and may even be able to find you a 100% home loan, helping you get into a home sooner.

What if your parents can’t help out?

If you don’t have a guarantor, there are still steps you can take to make it that much easier to secure both your finance and your contract of sale. We’ll talk more about your options in future weeks, but if you can’t wait that long, get in touch with First Class Lifestyle.

Disclaimer: The information contained in this article is for information purposes only and cannot be relied upon. You should seek professional advice tailored to your specific personal and financial circumstances.

Scott Miller