Home loan help and gov grants best way to beat lack of affordability

Sydney coast
Getty image: Sydney property is among world's most expensive.

With Sydney’s property market now in the top 10 most unaffordable cities globally, doing your homework on homebuying is more important than ever.

A new report by the Committee for Sydney shows that the harbour city has obvious housing problems, including a lack of property supply, poor planning and a culture that prioritises property investment, among other things.

As a result, Sydney’s chronically unaffordable housing is among the worst in the world (6th on the Committee’s list), costing the city $10bn a year.

This scenario has obviously made buying a home a lot harder in recent years but anyone in the Sydney market (or similar) should note that a range of homebuyer schemes have helped many first timers, while lower first deposit rules on certain home loans have also reduced the barrier to entry.

Low deposit home loans and homebuyer grants

If you’re looking at home loan providers right now, there are some that allow smaller first deposits than the standard 20%. For example, Bendigo Bank’s Express Home Loan permits a 10% deposit and has a variable interest rate of 5.72%.

Also, Loans.com.au’s Variable Home Loan 90 also allows a 10% deposit and has a variable interest rate of 5.79%. These rates are well under the average of 6.60% for variable home loans.

Meanwhile, there are several government-led schemes you can tap into as a first-time buyer. Under the First Home Buyers Grant, for instance, an eligible home buyer can buy a home with as little as 5% deposit without paying Lenders Mortgage Insurance. This grant runs until June 30, 2024. Additionally, each state offers its own schemes such as the First Home Owners Grant in New South Wales which lets home buyers who build a new home or buy a brand new or substantially renovated property receive a $10,000 grant.

There are eligibility rules for all grants, so be sure to review the fine print before going ahead.

Beyond prices, why does housing affordability matter so much?

Housing affordability isn’t only about the impact on people’s finances but also can contribute to a city’s happiness, inequality, vibrancy, transport and commuting times, and reduced access to important community services.

Among the solutions offered by the Committee for Sydney are an update of zoning rules to help new builds, investment in building more social and affordable housing, and an increase in housing in areas that have good transport connectivity and amenities.

While our governments hopefully work on such solutions, you can help yourself now by researching the best home loans available but also the suburbs that offer value for money.

Transport and amenities have increasingly improved in outer ring suburbs and that’s important because the price difference inside 25 kilometres from any given Aussie CBD is much higher than locations farther out. It’s worth checking a few options to see how far your money - and home loan - can take you.

If you’re ready to take the next step and compare home loans in the market, our experts at Mozo have pinpointed some of the best. Get your homebuying journey started and compare now!

Compare Low Deposit Home Loans - last updated 23 April 2024

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  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.