November 27, 2012
First homebuyers may be unaware that there are more ways than one to get into the property market.
Consider co-ownership Sharing property ownership between two or more people, such as a friend, family member or de-facto partner, lets both parties pool their resources to pay a deposit, maximise borrowing power and share property buying and management costs. Legal guidance is essential when considering this approach.
Find your feet with a family equity loan A parent/s can act as the loan guarantor for a homebuyer, by agreeing to let the homebuyers use the guarantors’ property as security. Having a guarantor will not help to increase your borrowing power but it will help to bridge the deposit and upfront expenses gap and it will likely help you avoid having to pay lenders’ mortgage insurance. Anyone who is considering being a guarantor for a property loan is advised to seek independent legal and financial advice beforehand. Most lenders will insist on this, prior to accepting a guarantee.
Take advantage of the new Government incentives From 1 October this year the First Home Owner Grant will increase from $7,000 to $15,000 on newly built or off the plan properties, with a value of up to $650,000. The grant will remain in place until 31 December 2013, but from 1 January 2014, it will drop back to $10,000.
First home buyers who purchase a newly built property or vacant land to build on may also be eligible to receive stamp duty exemptions/concessions.
Some handy links & downloads for First Home Buyers
Home before investment is not a rule People who want to get into the property market but may have been priced out of buying a home in the area they want to live may consider purchasing an investment property before a home. A clever investment property purchase and a little patience could see these homebuyers-to-be residing in their desired suburb sooner.
Hopefully, after a while, the equity built up in the investment property can be used to purchase a home. Lenders will lend money against equity, depending on the rest of the borrower’s financial situation.
Before making any decisions, speak to an accountant and/or financial planner to weigh up the cost versus benefit of this strategy.
For more information contact Andrew Heath & his team on 02 4578 9904 or click here to "Book a Meeting"