Many younger buyers find that it’s too overwhelming to start and keep delaying the decision to buy but the reality is the pain will just be greater in 10 years’ time.
First home buyers particularly tend to shy away from auctions as they can feel intimidated by the sales agent’s behaviour but our advice is to get a buyer’s agent to represent you for a modest fee. They know the moves to make and how to tip the odds in your favour.
Many first home buyers also need to recalibrate their expectations and go for something more modest for their first home. In the age of entitlement, you can’t get the dream home in the first year. It’s important to be patient and to realise that you may need to trade up three or four times to achieve that goal.
Here are four strategies from REBAA for getting on the property ladder:
If you can’t afford to buy where you want to live, just rent there and buy an investment property in a growth location that is more affordable. Get advice from a REBAA accredited buyer’s agent, one that knows the local market and can give you sound advice and help search for the best investment property. The key thing is to have your money working for you!
2. LENDERS MORTGAGE INSURANCE (LMI)
Rather than saving 20 per cent for a deposit, consider paying LMI to get a 90 per cent loan and just save the 10 per cent plus costs for a property. But get a good savvy finance broker to find the best loan and get pre-approved. This is a faster way to get on the first rung.
3. USE EQUITY WITH PARENTS OR FRIENDS
Do a joint venture with a trusted friend to get into a property. Make sure the joint venture agreement is drafted by a solicitor and is clear cut. Be aware that you will be jointly liable for the loan repayments. Parents should be very careful about offering to go guarantor – better to simply gift some equity than have responsibility for the entire loan.
4. LOOK AT WAYS TO ADD VALUE
Renovations are one of the easiest ways to add value to a property and don’t need to be extensive. It may be simply ripping up the carpet or the floor boards, redoing the kitchen, adding a bedroom or painting inside and out. Another option is to look at property with subdivision potential or increase yield with a granny flat.