Getting into your first property is a hot topic that stirs up a lot of emotion, leaving many young people concerned that they may never be able to get their foot on the property ladder. Buying your first property, whether it is your first home or an investment property is not an easy task. However, with the right advice and a well thought out plan it can be achieved!
There are many options when it comes to financing your first property, and depending on your own personal situation, a particular method can be utilised in order to secure your investment.
- Cash Deposit. This method is widely understood amongst the general public. It involves saving up a sum of cash over a period of time and then using it as a cash deposit towards your property. Furthermore, you can also make effective use of any cash windfalls. Cash windfalls can come from range of sources including; a cash gift from a family member, inheritance or the proceeds from the sale of assets. Generally we suggest saving at least a 10% deposit plus costs prior to arranging your finance pre approval in order to minimise the amount of lenders mortgage insurance payable.
- Family Guarantee. The use of this method in today’s society has become progressively more popular. Family guarantee is a financial structure, where the initial deposit is guaranteed against a family members home or investment property. The remaining funds are borrowed simultaneously against the property that is being purchased. Through utilising the family guarantee method you can effectively purchase your first home or investment property without the need for a substantial cash contribution. However, it is important to note that if you do not meet your loan repayments, the guarantors will be liable for the guaranteed portion of the loan.
- Partnering. Partnering, although a relatively unknown method, is very effective in terms of overcoming the larger barriers of entry involved in purchasing a property. When partnering, you are combining your assets with another person to obtain a better result than if you approached the property ladder on your own. Examples of combinations that are being utilised today are partnerships between spouses, friends and siblings. Additionally, we are also seeing parents and children combining their efforts to achieve greater results.
However, it is important to note that lenders will not only require equity in the form of a cash deposit or a family guarantee but they will also require a history of consistent income.
In summary, a proficient mortgage broker can combine any of the methods outlined above in order to assist you in making an informed decision, before taking the leap into the property ladder.
if you would like to meet with Sam Panetta to discuss your options for purchasing your first property, please contact him here!
Best of luck!