What sort of property buyer are you? A home loan technique for all

Not everybody is the exact same, and not everybody is on the exact same home-purchasing journey. That’s alright! There’s a fantastic range of home loans to match various requirements. If you’re having difficulty discovering choices that match you, it might help to very first discover your ‘type’.

So without additional ado: what sort of property buyer are you?

(Hint: you might be more than one).

Gotta start someplace! The initially home-purchaser (FHB) is trying to find a foot in the door, typically to their dream home or a starter property, like a unit. They tend to be young however that’s not constantly real. You’re a very first home purchaser if:

• You’ve never ever owned property prior to;
• You wish to;
• And you’d like to live there. 

That’s it!

Good news, too: as a very first home purchaser in Australia, you might be qualified for federal government home-ownership grants like the First Home Owners Grant (FHOG) or the First Home Owner Deposit Scheme (FHODS), which can help reduce the cost of funding a home loan. 

There’s likewise an entire class of very first home purchaser home loans customized to the requirements of individuals who haven’t purchased them in the past. Many of these loans concentrate on using interesting functions, good worth, and low-interest rates to qualified candidates. Compare what’s out there to see what’s available to you – the range might shock you!

Going it alone? Amazing. Independent spirits who organize their fate can definitely purchase property, whether it’s their very first, 2nd, or tenth. (If it is your tenth, please inform us your trick). 

Single earnings purchasers deal with some distinct difficulties, however. It may take longer to save up for a 20% housing deposit and your lender might give your application some side-eye – after all, from a lending perspective, it’s hard to argue with the borrowing power of two incomes.

However, single buyers are still a significant demographic among property purchases, especially single women. So what are some strategies that can help?

• If you’re a single parent, consider using the Family Home Guarantee (FHG), a government-backed grant to help lower the cost of home ownership. Other government grants like the FHODS and FHOG are also good options – you don’t need to be a couple to apply!
  
• Consider buying with a smaller deposit. You don’t need a 20% deposit to take out a loan, but small deposits have pros and cons. For instance, high LVR loans often cop higher interest rates and the added cost of Lender’s Mortgage Insurance (LMI). Weigh up your options and discuss your situation with a financial planner. 
  
• Ask someone to be your guarantor. This is where the Bank of Mum and Dad can come in handy. If your parents, relatives, or friends are willing and able, talk to them about becoming a guarantor on your home loan. Doing this can give your application a little extra “oomph” with the lender.

Buying property with the love of your life? Congrats! You’re already committed to each other, why not create a place to live? Many young couples and families both new and established have gone on the hunt in recent years for the dream home, checking off big-ticket items like more space, great locations, and…more room for pets?

Most couples and families also tend to be first home buyers, too, which means they could be eligible for government grant assistance. Huzzah!

Buying with someone – even if it’s your friend – still comes with lots of things to discuss. Sharing a mortgage with a partner means putting your salaries, lifestyles, and credit histories on the application, and you’ll need to decide how you want to split the payments and legal responsibilities. 

Some terms to know include joint tenancy and tenancy in common. In the former, both of you are equal owners of the property. With the latter, your ownership is split unequally.

For example, a tenancy in common mortgage can be split 80:20, 60:20:20, or any other ratio that suits your relationship. For this reason, tenancy in common is popular among groups of friends who decide to go in on a place together, while joint tenancy works for most couples. 

Every situation is different, however: the only thing that matters is you and your partner(s) are on the same page.

Financing a home loan with multiple salaries also doesn’t mean you can easily afford one, especially if you have kids. If you need some low-budget inspiration, here are three strategies to get into the property market.

Maybe you’re an empty nester or a retiree. Perhaps you’ve been too busy until now, or you’re looking to downsize. But for whatever reason, you’re looking to buy a property later in life. That’s totally okay! Boomer home loans may not be the most flattering name, but plenty of Australians buy later in life and face unique challenges because of it. 

Since most home loans are designed to last at least 20 years, lenders will be interested in hearing how long you plan to work and how much money you’ll have in savings. If this is your first home, you may be eligible for government housing assistance, but if it’s not, it could be an uphill battle.

If you’re looking to upgrade or downgrade, there’s also selling your current home to consider. Right now the property market has plateaued, so it may be tricky to sell in a falling market. If you don’t own your place outright, selling with a mortgage has some needles to thread as well. 

However, if you bought wisely in a neighbourhood with good capital growth, you could be sitting on a nice profit. It’ll just be important to reduce the capital gains tax when you sell. 

Don’t forget to budget for home selling costs, too, like agent, auction, and property valuation fees.

Not everyone is looking to live in the place they buy. Maybe they want to expand their portfolios, enjoy perks like landlord tax breaks and rental earnings, or build up equity by buying in a cheaper market while living elsewhere (called rentvesting). 

If this sounds like you, congratulations: you’re a property investor!

Investment home loans are in a different category from everything else. Because they’re considered financially risky by lenders, investors cop higher interest rates, which drives up the cost of servicing your mortgage long-term. Investors aren’t eligible for first homeownership grants, either, so the funding is on you.