How do I get onto the property ladder?
This is by far my largest request. It requires sacrifice, hard work and a plan to get on to the property market. “If you are willing to do only what's easy, life will be hard. But if you are willing to do what's hard, life will be easy” T. Harv Eker.
5% genuine savings, plus costs being stamp duty, mortgage transfer fees, registration of mortgage fees, lawyers fees as well as council and water rates. Genuine savings is defined as saving 5% into a bank account over a period of 3 months without drawing any funds out. Currently you will be paying Lenders Mortgage Insurance (LMI) or a risk fee. The Liberal Party announced prior to the 2019 election that First Home Buyers will be able to get their first property without paying LMI. I have yet to receive information as to how this will be achieved.
5% non-genuine savings + costs. This refers to gifts, other borrowings and/or rental receipts.
Parental guarantor. This is when your parents have a large amount of equity in their home that can be borrowed against. The guarantee should at the maximum be limited to 20% of the new property + costs. Please note that you are required to pay off this loan because if you don’t, the lender will seek recourse from your parents. If after a year the lender can not get their funds back, they will enter legal proceedings to take possession of the property.
Your parents gift you the funds.
If you are a first home buyer, you may be eligible for a government grant. Some developers are willing to chip in for you to buy a brand new property.
Buy a house with your parents, siblings or people you can tolerate in the long run. Have a contract regarding ownership, responsibilities and what happens under certain events. Please know each other’s financial situation. If one goes bankrupt, you don’t want to follow down the same path. If they are the type to take responsibility, you are onto the right person you should be investing with.
Rent a property where you want to live with other people, buy in a good area that is touted to go up in time and rent it out. Put your additional savings into an offset account against the property.
