For many Australians, stepping onto the property ladder represents stability and long-term financial growth. Whether you’re a first home buyer or looking to upgrade, there are important factors to keep in mind as the market continues to evolve.
Why Now Might Be the Right Time to Buy
With rising rental prices and fewer properties available, entering the property market sooner may help you secure stability. Although interest rates have risen, many analysts predict that we may be nearing the end of the rate hike cycle. This offers an opportunity to secure financing at rates that, while higher than a couple of years ago, could potentially stabilise. Locking in a mortgage now allows you to start paying off your own home rather than contributing to your landlord’s mortgage.
If you’re thinking of upgrading your home, taking advantage of your current home’s equity could enable you to move into a larger home and potentially retain your current home as investment (saving on agents fees to sell and on investor stamp duty to buy an investment property later).
Building Long-Term Equity
One of the most compelling reasons to buy a home is the opportunity to build equity over time.
As you pay down your mortgage, your equity increases, giving you options for future investments, property upgrades or to help your children enter the property market.
For most Australians, the family home is the cornerstone of wealth creation over the long term.
Deposit Options for First Home Buyers
Saving for a 20% deposit might seem like a daunting task, but there are several alternative paths to homeownership:
- First Home Guarantee:
- If you qualify for the First Home Guarantee, you could buy with a deposit as low as 5%, without paying LMI. If you’re a single parent with at least one dependent, this could be as little as 2%. This is a great option if you want to fast-track your journey into homeownership.
- Low Deposit Loans:
- Many lenders allow first home buyers to enter the market with as little as 5% deposit. This can enable you to buy sooner, but keep in mind that this may also mean higher loan repayments and the added cost of Lenders Mortgage Insurance (LMI)
- The Role of Family Assistance in Homeownership:
For many first home buyers, family support can make a significant difference in stepping onto the property ladder. Options like family guarantees, where parents or grandparents use their property as security, can reduce the need for a large deposit.
Alternatively, financial gifts or correctly structured loans from family members can provide the extra boost needed for a deposit without impacting borrowing capacity. Properly structuring these arrangements is key to protecting family wealth, especially when young buyers are purchasing with partners. Exploring these options with a mortgage broker ensures the process is both secure and effective.
Upgrading Your Home: Is Now the Right Time?
If you’re thinking of upsizing, there are a few key considerations. Moving into a larger home may offer more space and better amenities, but it also brings new commitments. It’s important to evaluate:
- Higher Ongoing Costs
- A larger home may mean higher energy bills, maintenance costs, and council rates. You’ll need to factor these into your budget alongside your new mortgage repayments.
- Equity Leverage
- Upsizing allows you to use the equity in your current home to fund the new purchase, although it’s important to take into account selling costs and stamp duty on the new purchase.
- Bridging Loans
- If you haven’t sold your current home yet, a bridging loan could help cover the financial gap between buying your new home and selling your old one
Rent vs. Buy: A Question of Stability
Renting offers flexibility, but it also comes with uncertainty. Leases may not be renewed, and rent can increase over time. On the other hand, homeownership offers stability and control. Plus, many lenders now accept rental history as proof of your ability to service a mortgage, giving renters a smoother path to financing their first home.
Next Steps: Finding the Right Loan
Whether you’re buying your first home or upsizing, getting the right loan is crucial. At Affinitas Finance, we’ll guide you through the process, from assessing your borrowing capacity to finding the best loan for your circumstances.
- For First Home Buyers:
- We’ll help you explore low-deposit loan options and navigate government incentives like the First Home Guarantee as well as options like family guarantee loans.
- For Upsizers:
- We’ll work with you to leverage your home equity and guide you through bridging finance options if needed.
Conclusion: Ready to Take the Next Step?
Navigating the property market in 2024 doesn’t have to be overwhelming. Whether you’re a first-time buyer or looking to upgrade, Affinitas Finance is here to provide expert advice and tailor solutions that suit your financial goals.
Contact us today to start your journey towards homeownership or upgrading to your dream home.