Saving for a deposit to buy a home can be very difficult, when your rent payments keep going up and you have the other regular expenses as well.
Independent mortgage broker, Mortgage Choice says many people manage to get the cash together for a deposit using traditional methods of tight budgeting and setting savings targets.
“While penny watching and scaling back on life’s luxuries are still proven ways to save for a deposit, there are also some not-so traditional methods Australians are utilising to get them home sooner,” Mortgage Choice spokesperson Kristy Sheppard said.
One method is setting up a first home buyer savings account, which attracts a lower tax rate on interest earned and gets a government contribution on the first $5,000 you deposit each year.
Selling an asset like a car or boat is obviously a quick way to get a home deposit but that by itself is unlikely to be enough as most lenders require a genuine record of savings.
Ms Sheppard says borrowers need proof that they have a history of increasing savings.
“This is money saved and held over at least three recent successive months and excludes lump sum deposits from the sale of personal assets,” she said.
“However, some lenders will take such funds into consideration on a case by case basis, if after selling the asset you can show a history of maintaining or increasing the savings over at least three months.”
Some lenders will also consider rental payments as evidence of genuine savings.
Typically if you have a five per cent deposit plus evidence of six to 12 months of continuous rental history, some lenders will see that as sufficient evidence of savings.
“These lenders will assess your eligibility for a home loan approval by comparing your current rental payments and any regular savings with the cost of the home loan repayment,” Ms Sheppard says.
Buying a property with someone else is and another way to get into home ownership.
One or both of you can live in property or you can rent it out.
“However, it’s important to seek independent legal and financial advice prior to signing a co-ownership agreement, loan contract or purchase contract,” Ms Sheppard says.
“Everyone must understand their rights and obligations as well as the plans each co-owner has for the property and their loan repayment strategy.”
So, while there is help on offer, and some potentially creative ways to get a deposit together, potential home buyers should still get saving.
* Copyright Australian Associated Press