How to Go About Buying a House with No Savings
Many Australians dream of owning their own home one day, however, in today’s ever increasingly competitive market, this dream is becoming harder and harder. For the most part, people are choosing to continue renting homes rather than taking the leap to buying their own property. One of the main reasons for this is that people do not have the necessary savings to make a Deposit that will allow them to get a mortgage on a home. In this article, Whitehouse Real Estates will break down some of the ways that purchasers can go about buying a home without saving the required deposit.
First Home Owners Grant
The First Home Owners Grant is a state-backed initiative that gives Australians a financial leg up to help them buy their first home. To be eligible for the grant, individuals must meet some requirements, which may vary between states and territories. For example, the home buyer must be planning on living in the home for a certain timeframe[SK1] . Check the NSW Government website for more information on the First Home Owner’s Grant and First Home Buyer Assistance Scheme.
Getting a Guarantor
Another option that can get you into the property market is asking a family member or a friend to co-sign your bank loan as your guarantor. Guarantors must provide proper documentation that proves they are financially stable enough to make loan repayments if you fail to do so.
Asking someone to be a guarantor should not be done lightly, as it legally becomes the guarantors’ responsibility to make loan repayment on time, in the event that you are unable to.
Monetary Gift
If you receive a financial gift from a close friend or family member, you may be able to use that money to put down a house deposit. However, lenders, such as banks, often require a ‘gift letter’ which guarantees that the money you received does not need to be paid back to the person who lent it to you.
Buying a House in Sydney: Equity in Another Home
If you do not have savings, but you own a property that is now worth more than you owe on the mortgage, you may be able to take equity from that property in order to put down a house deposit on a new home.
Zero Deposit Home Loan
Although this was far more common prior to the financial crash of 2008, some banks offer a zero deposit home loan. This scheme allows you to obtain a mortgage without putting any initial deposit down. It usually requires you to have a very good credit score, and proof of consistent and sufficient income. Another option is a low deposit home loan, which allows you to acquire a mortgage after putting a low deposit down, sometimes as little as 3-5%.
White House Real Estate is not licenced to provide financial advice. We encourage you to seek professional financial advice before making any large purchase or taking out a mortgage.
For more information about buying a house in Sydney with or without a deposit, get in contact with Whitehouse Real Estate online, or call us today on 02 9948 0666.