Entering the property market in 2024 may seem unattainable, but with a couple of sensible moves you may be able to own your own home faster than you ever thought possible.
We give some handy advice on what our clients do to buy property.
Many first time buyers are unaware of the option of using a guarantor to help get into their first home. If a deposit is the main thing holding you back it may be a beneficial option.
What are the benefits? Family guarantors use the equity in their home to offset a small portion of a family-member’s purchase deposit.
Mortgage lenders that accept a family guarantee are often able to reduce the deposit you are required to supply as your family member’s asset provides collateral.
So who can go guarantor? A parent, step-parent or guardian are generally the only members of your family that most banks accept as a guarantor. Other family members, such as siblings, or a close friend are typically intelligible
What do they need to go guarantor? The location your family member currently resides often isn’t an obstacle, however they must own at least one property holding in Australia to be used as a guarantee for your loan
What are the risks? Although a guarantor many seem like a great way to get into the market, it’s vital that you don’t overcapitalize on your purchase. All repayments are expected of the house owner and not the guarantor.
If you fail to make your repayments and the house goes into foreclosure your family’s home may also be sold to finance any losses the bank or financial institution incur
If it’s right for you, what should you do? The first thing you should do as the purchaser is to find out whether your lender accepts family guarantees and the specific requirements that would be imposed if they do.
Before moving forward, it is advisable for your family member, or members, to seek independent legal advice to ensure they are aware of their commitment and legal obligations.
Buy An Investment Property First
If owning a home to live in appears too restrictive or impractical, our buyer’s agents recommend owning an investment property may be the right move to get started in the property market.
There are numerous reasons why owning an investment property may be a more sensible option to purchasing a house to live in. If you’re living with family or cannot afford to buy in the area you want to live in, purchasing an investment property may get you into the market without interfering with your current living situation.
What are the benefits? Owning an investment property has the capacity to increase taxation benefits and create a nest egg to finance future property aspirations.
Holding onto a property for a few years could generate a good return, and if organized well, tenants may predominantly fund the investment.
What are the risks? Like any investment, the return you receive relies on many factors. Before entering the investment market it is essential you understand your legal and financial obligations, as well as purchase a property that has the best opportunity for financial success.
If it’s right for you, what should you do? When advising clients, our lead buyers agent Mark Ribarsky suggests three key factors you should consider before purchasing an investment property:
Budget: develop a firm budget that considers the price of a potential property, funding any current or future improvements and regular obligations, such as rates and real estate fees
Market strategy: research the current rental market in your chosen area to determine occupancy statistics and rental returns
Long Term Financing: create a plan for your investment that considers how you would fund the investment if the property remained unoccupied for a period of time and how long you intend to hold the property.
Prepare to Own Without Owning
If purchasing a property just isn’t in the cards in the immediate future, you can start working towards getting into the market through patience and planning. What is involved?
Successful investors often comment that the first step is one of the hardest stages of climbing the property ladder. If funding a deposit or affording a particular area is unattainable at the moment, start saving your pennies the same way you would if you did own a property
Researching is free and a valuable asset. Investigating the financial commitments of owning a property compared with your current position clarifies what will be expected down the track.
Using this time to place the financial difference into a high-interest savings account or other form of investment will help work towards your goal so you can own a property sooner.
What are the risks? Adding to a savings account holds very few risks as long as you are committed to not spending the money saved.
Other investments hold greater risks, but often offer higher returns. Once you decide on the form of investment best suited to your life-style and commitments consider the individual risks involved to make an informed decision.