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If you feel that you're getting priced out of the booming property market, here are a few tried and tested approaches to get on track.
Are you keen on entering the property market in the wake of all-time low-interest rates but are unable to take the plunge as prices continue to rise? Well, you are not alone. A lot of property buyers see their property goalposts moving away in a booming market. But the good news is that it is possible to get on to the property ladder with a few strategies. Here is our take on a few practical approaches.
A lot of first home buyers make the mistake of setting their property goals too high. Your first property does not have to be your dream home. As the name suggests, Rentvesting is buying a property for renting rather than staying. Break into the property market by purchasing a house within your means in an affordable suburb. This could be in the same city, or you could even explore options in some upcoming rural locales. Consider properties with good rental yield. Use the rental income you earn from your property to offset your current expenses.
#2 Find a Guarantor
A guarantor is an individual who takes the responsibility of making loan repayments if the borrower is unable to do so due to unforeseen circumstances. While this sounds a little scary, parental guarantee schemes where parents become a guarantor for their kids’ loans are relatively common. Finding a guarantor has three benefits
- The loan deposit you need to put up reduces significantly
- You are in a position to negotiate a better rate
- You can get help from family or friends without asking for any financial assistance.
For a complete guide on how parental guarantee schemes work, click HERE
#3 Maximise your borrowing power
Securing the right loan amount is crucial for buying property in one of the world’s most expensive markets. Maximising your borrowing power is all about improving your credit score to minimise your perceived risk as a borrower. Some easy step you can follow to achieve this are:
- Keep expenses under control- avoid going on spending sprees and, if possible, restrict eating out
- Practise financial discipline – Establish a monthly budget and stick with it.
- Don’t run behind on payments like rent and utilities – choose from a range of free and reliable online apps and tools to remind you to make timely payments.
- Pay off debt- Try and pay in more rather than going with minimum payments. Avoid applying for more credit in case you already have debt.
#4 Opt for the right loan
In addition to the right loan amount, finding the right loan with good features is equally important. While the mortgage market is pretty complex, and you should ideally rely on the professional advice of a mortgage broker, here’s a high-level view of the facets of a good home loan
- Reasonable Turnaround time – don’t miss out on a good property deal because your mortgage funds didn’t get released on time.
- Good loan features – options like an offset account and redraw facility are crucial in expediting homeownership.
- Flexibility- making larger repayments more frequently as well as ploughing back windfall gains like a bonus or inheritance let you pay off your mortgage sooner.
The most straightforward approach to developing a strategy for your property goals is to engage a mortgage broker. Lenders usually pay mortgage brokers once a loan settles, and they generally don’t charge borrowers for their service. In addition to scoping the market for the right home loan, your broker will also manage all your loan paperwork.
Reach us for the best way as per your circumstances.
The information is a compilation from various sources for your benefit and should not be relied upon in lieu of appropriate professional advice.