If the housing market seems impossible to enter, you may want more information about the steps you can take to make it easier or more accessible to you. Understanding key approaches to affording a property purchase will bring you one step closer to buying your first dwelling.
1. Taking Advantage of Government Schemes and Initiatives
The first home buyer scheme gives owner-occupiers an opportunity to save thousands on stamp duties during their purchase. A savings of a few thousand dollars gives buyers that little edge during auctions, a bit more wiggle room in your kitchen reno, or even let you move up one or two notches on the realestate.com refine search section. Other government schemes that were introduced as a result of COVID, give assistance to single parent families, or those who are building their home newly built.
2. Save on rent, live at home
It’s important to note that everyone’s home life is different, so it might not be a realistic option for all. However, if you are comfortable enough in your family home, forget the old-fashioned stereotypes of living with family in your later life, and use the access to free or cheap accommodation in order to save more money for a future home deposit. Rather than your income going towards high rent prices, it can build towards your future home deposit.
3. Calculate your rent in comparison to a mortgage payment
It’s understandable that some see home purchasing as a daunting and impossible feat. Especially for younger generations, where home ownership has gone down. But if you are renting, using an online mortgage calculator to establish how big of a mortgage you could be paying off with the same amount as your monthly rent, can really put your purchasing potential into perspective. Let’s look at an example.
Using the home loan calculator from moneysmart.gov it can be established what an individual could afford to borrow and purchase with, according to her current rent payments.
Let’s say you pay $1500 in rent per month. Using the calculator, we can apply the current standard interest rate of 2.33%, apply a loan length of 30 years, standard monthly fees and set the repayments to monthly.
This calculates to being able to borrow $385, 671. So, rather than paying this $1500 a month to your landlord, you would be putting monthly payments towards your own ownership of property. Rental payments go towards your right to live in a space, whereas mortgage payments, of the same amount, not only go towards your right to live in the property, but eventually own and resell the property for a profit.
4. Renting out your space
If you can afford to buy more than one bedroom, consider moving in and renting out one of your spare rooms to a tenant. This way, your roommate can help pay for part or all of your mortgage payments each month.
Perhaps your ideal area is a bit out of your purchasing budget. This is where rentvesting gives you the opportunity to live in your favourite suburb while earning rental income from your property in a more affordable neighbourhood. While you rent closer to the city, your investment property that is located in a more affordable area can be rented out. This rental income will assist with your own rent costs or personal savings to help work towards one day owning in your dream area.
6. Ask for help
Entering the property market can be confusing and at times seemingly impossible. We make it make sense. Our job as Mortgage brokers Melbourne is to make the loan application process approachable and as stress-free as possible. Get in contact today for assistance in your home purchasing journey.