In 2024, financing your first property can be tough with rising home prices. However, there are several effective strategies to help first-time buyers secure their first home.
Whether it’s investing in regional areas, borrowing from family, or co-ownership, this guide outlines 9 secret ways to finance your first property and overcome market challenges.
1. Invest in Regional Areas
Housing in Australia’s major cities has become expensive. Prices in Sydney and Melbourne have risen by over 7% this year. For many first-time buyers, this makes it difficult to buy their first home. However, in regional areas, property prices have grown more slowly.
Some regional towns offer more affordable options, making it easier to finance your property while still enjoying a good quality of life.
Regional areas have seen improvements in transport, healthcare, and education. This makes them attractive for buyers looking for affordable homes with more space. Investing outside the city can help you get your foot on the property ladder sooner.
2. Take Time to Save More
Rushing into the market can lead to higher costs. If you’re not in a hurry, consider saving for a larger deposit. A bigger deposit reduces your loan and makes monthly repayments more manageable. Experts predict interest rates may fall by 2025.
This gives buyers time to save more while waiting for lower borrowing costs.
In the meantime, you can explore different home loan options. Some loans offer extra features, such as allowing additional repayments without penalties. Having more time will help you choose the best loan for your needs.
3. Get Help from Family
Many first-time buyers get help from family to finance their first property. In 2024, more than 20% of new buyers are relying on financial support from their parents.
The average contribution is around $70,000. This can help buyers avoid fees like lender’s mortgage insurance and reduce the size of the loan.
If you plan to borrow from family, make sure everyone agrees on the terms. Will the money be a gift or a loan? It’s a good idea to put the agreement in writing to avoid misunderstandings in the future.
4. Consider a Fixer-Upper
Fixer-uppers are homes that need repairs, but they’re often much cheaper than ready-to-move-in properties. Buying a fixer-upper can be a great way to buy your first home while staying within your budget.
You can renovate the home over time, improving its value as you go. This also gives you more control over how much you spend on upgrades.
When buying a fixer-upper, be sure to plan for the cost of repairs. It’s important to have a budget for improvements and to make sure the home is structurally sound before buying.
5. Partner with a Friend or Relative
Buying a home with a friend or family member can help reduce costs. By sharing the deposit, mortgage, and upkeep, you can make the process more affordable. Co-ownership is becoming more popular, as many people struggle to finance a property on their own.
Before entering into this type of arrangement, make sure you have a clear agreement in place.
A written contract should cover how costs will be divided and what will happen if one person wants to sell. This ensures both parties are protected and helps avoid future disputes.
6. Look for Smaller Properties
Large homes are more expensive, especially in today’s market. However, you don’t need a big house to buy your first home. Many first-time buyers are opting for smaller properties, such as one- or two-bedroom homes. This can reduce the cost of entry into the market and make it easier to finance a home.
You can always upgrade to a larger property later when your financial situation improves. For now, focus on finding a home that meets your current needs without stretching your budget.
7. Stop Renting and Save Instead
Renting is becoming more expensive across Australia. With rent prices rising, many first-time buyers are struggling to save for a deposit. One way to save faster is by cutting down on rent. This might mean moving in with family, sharing a house with friends, or house-sitting to reduce your expenses.
By reducing your living costs, you’ll have more money to save for your deposit. The faster you save, the sooner you’ll be able to buy your first home and stop paying rent.
8. Consider Buying at an Auction
House auctions are still popular in 2024, and they can offer a good opportunity to find a bargain. Some sellers list their properties at auctions because they need to sell quickly. If demand is low, buyers may get a better price than they would in a regular sale.
Before attending an auction, set a clear budget and stick to it. It’s easy to get carried away in the moment, but staying within your limits will help you avoid overpaying.
9. Seller Financing
In some cases, the seller may be willing to finance the property themselves. This is known as seller financing. In this arrangement, the buyer makes payments directly to the seller instead of going through a bank. While this option can save time and money on fees, it comes with some risks.
The buyer won’t own the property until it’s fully paid off, and there’s no equity until the loan is complete.
If you’re considering seller financing, make sure to get a legal agreement in place. This will protect both parties and outline the terms of the deal.
Conclusion
Buying your first property in 2024 is possible, even in a competitive market. By exploring regional areas, saving more, and considering creative options like co-ownership or fixer-uppers, you can find ways to finance your first home.
The key is to stay flexible and patient. With careful planning, you’ll be able to take the first step towards homeownership.
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FAQ for First Time Home Buyers in Australia
How much deposit do you need for a first-time home buyer in Australia?
For first-time home buyers under the First Home Guarantee, you will need a minimum deposit of 5% to 20% of the property price. If you have more than a 20% deposit, you won’t be eligible for the scheme, but you’ll avoid paying Lenders Mortgage Insurance (LMI).
How do you buy your first home in Australia?
Here are the key steps:
- Decide to buy.
- Organise your finances.
- Check how much you can borrow.
- Plan your deposit and research grants.
- Choose the right mortgage.
- Get pre-approval.
- Start looking for a home.
- Conduct a building and pest inspection.
How can you buy property in Australia with no money down?
There are several ways to buy property without a deposit, including guarantor loans, using home equity, the First Home Loan Deposit Scheme, gifted deposits, personal loans, and superannuation for investment properties.
Can you buy a house with no deposit in Australia?
Yes, it’s possible, but uncommon. Lenders may consider no deposit loans on a case-by-case basis, but low deposit home loans are more common.
Can you buy a house with a $10,000 deposit in Australia?
Yes, through a new homebuying scheme like Coposit, which allows buyers to secure a home with as little as a $10,000 deposit. The scheme is available for certain off-the-plan (OTP) projects.
How much deposit do you need for a $300,000 house in Australia?
For a $300,000 house, you’ll need a minimum deposit of $25,038. If you aren’t a first home buyer, you’ll also need to cover stamp duty, bringing your total deposit to at least $28,432 in Queensland.
What salary do you need to buy a house in Australia?
The salary needed depends on the state or territory:
- NSW: $148,000 for a median property of $1,090,270
- Victoria: $110,000 for a median property of $788,484
- Queensland: $90,000 for a median property of $662,199
- South Australia: $73,000 for a median property of $558,179
