How to enter the property market faster
2 min read
26th October 2023
Owning a home has long been the Australian dream, but it can be challenging to get on the property ladder, particularly as property price growth has vastly outstripped wage growth over the past two decades.
A FAMILY GUARANTEE HOME LOAN
Don’t want to pay LMI? Another option is a family guarantee loan.
With a family guarantee home loan, a guarantor (usually a parent or close relative) pledges a portion of their own property as security for your home loan, helping you avoid LMI.
The guarantor isn’t required to make any repayments or provide any funds upfront. That said, they are liable for the loan if you subsequently default on your repayments. As a result, it’s important everyone involved fully understands the risks and responsibilities before committing to this type of loan.
GOVERNMENT HOUSING INCENTIVES
At the state level, Tasmania offers several grants and schemes to support eligible first home buyers, such as:
- The First Home Owner Grant – a one-off payment of up to $30,000 for eligible applicants buying or building a new home
- A 50% discount on stamp duty – for first-home buyers buying an established home valued at up to $600,000
- The MyHome program – A shared equity program that helps Tasmanians get the keys to their own homes sooner thanks to an equity contribution from the state government
HOME GUARANTEE SCHEME
At the federal level, the Home Guarantee Scheme lets you buy a property with a low deposit without paying LMI.
From 1 July 2022, the Home Guarantee Scheme has 50,000 places available each financial year made up of:
- 35,000 First Home Guarantees: These help eligible first home buyers purchase a property with a deposit of as little as 5%
- 10,000 Regional First Home Buyer Guarantees: These help eligible regional first home buyers purchase a home in a regional area with a deposit of as little as 5%
- 5,000 Family Home Guarantees: These help single parents with at least one dependent child buy a home with a deposit of as little as 2%
LENDER’S MORTGAGE INSURANCE
LMI is a one-off fee paid by the borrower to protect the lender in case the borrower defaults on their mortgage.
While paying LMI can add thousands of dollars to your costs, it can help you enter the property market faster by reducing the deposit burden.
A FAMILY GUARANTEE HOME LOAN
Don’t want to pay LMI? Another option is a family guarantee loan.
With a family guarantee home loan, a guarantor (usually a parent or close relative) pledges a portion of their own property as security for your home loan, helping you avoid LMI.
The guarantor isn’t required to make any repayments or provide any funds upfront. That said, they are liable for the loan if you subsequently default on your repayments. As a result, it’s important everyone involved fully understands the risks and responsibilities before committing to this type of loan.