It’s spring property season and if you are one of the many Aussies trying to get a foothold on the property ladder, then right now you might be scrutinising your finances and weighing up your options. Of course, in the current housing market you might not be able to bag your dream house straightaway, especially if you’re a Sydney-sider or a Melbournian.
Indeed, according to a report published by Genworth Insurance, the first-home buyers’ dream of buying a big old house full of character is being replaced with a strategic plan to invest in a small apartment and then trade up for a house within 5 years of purchasing.
The report cites a survey undertaken in June and July 2019, wherein a sizeable 32.3% of 2,001 prospective first home buyers expressed their plans to sell within 5 years. That’s more than double the 15.8% of the 1,008 recent first home buyers surveyed, who also intended to sell their first property purchase within 5 years.
So how can you get a foot in the door?
If you’ve done the maths and you’re at a bit of a loss as to how you’ll ever get a foot in the door of your dream home, here are a few ideas that might help you out:
If you have at least 5% of your deposit saved up, you could wait for the government’s proposed First Home Loan Deposit Scheme to become available in January, 2020. With this scheme the government propose to cover the remaining 15% of your deposit. You’ll still owe 95% but this way you might be able to avoid lenders mortgage insurance.
Think about investing in a rental property; the report found that investment properties are becoming increasingly popular, with 15.5% of the prospective first home buyers surveyed looking to acquire an investment property as their first home. This figure was even higher in Sydney, where 24.8% of the prospective first home buyers were looking to invest in a property and then use the rental income to pay off the loan.
Mozo Editor’s home loan picks for first time buyers
loans.com.au Essentials Variable 90
Apply with a 10% deposit!
Variable rate from 3.19% (comparison rate 3.21%*)
Winner of a 2019 Mozo Experts Choice Award^
Online lender loans.com.au’s Essentials home loan package currently has a variable rate of 3.04%* p.a. on a principal and interest loan between $50,000 and $2,000,000 (comparison rate 3.06%*, LVR <90%). Plus with a 2019 Mozo Experts Choice Award for best Low Cost Home Loan to its name and the ability to apply with a 10% deposit, this home loan might just be worth checking out if you’re in the market for your first home loan.
HSBC Discounted Home Value Loan
Competitive variable rate from 3.17% (comparison rate 3.19%*)!
HSBC’s Home Value Loan might also be worth looking into if you’re searching for your first home loan. The bank’s home loan package managed to scoop up not 1 but 3 2019 Mozo Experts Choice Awards, including an award for best First Home Loan. Plus with a competitive variable rate of 3.02%* p.a. on principle and interest loans between $50,000 and $7,500,000 (comparison rate 3.04%*, LVR <90%) and the ability to apply with a 10% deposit, this might be worth checking out if you’re looking to purchase your first home. Although it should be noted that with a 10% deposit you will have to pay lenders mortgage insurance.
*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for the amount and term you entered.
**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
Want more first home buyer options? Head to Mozo’s first home loans comparison page and enter the amount you’re looking to borrow to get a more accurate idea of what home loan package would suit you.
You can even use Mozo’s home loans borrowing calculator to figure out what size loan you can afford on your budget. And if you’re after a more personal touch you can even get in touch with Mozo’s Home Loan Negotiator Steve Jovcevski for tips on negotiating a better deal.