With record high property prices across the state, it can seem increasingly difficult to save for a house deposit and comfortably afford the repayments on a home loan.
However, there are several options to help you enter the property market with a smaller deposit.
The Queensland Government provides the First Home Owners’ grant to help Queenslanders enter the property market. The $15,000 grant is available to first home buyers who purchase a new or substantially renovated house, unit or townhouse valued at less than $750,000. Your lender
can help you to determine eligibility and apply for the grant.
Consider a longer loan term
While most home loans are 20-30 years, a small number of lenders offer loan terms of up to 40 years
. Longer loan terms can be beneficial for buyers who are looking for the flexibility of smaller monthly repayments. This can make the loan repayments more manageable for first home buyers, however, speak to your lender to ensure you are aware of your options. Consider how your loan will meet your needs now and into the future.
Get a guarantor
If you have a small deposit or limited equity available to purchase your home, a guarantor can provide the additional security needed to secure the loan. This is generally an immediate family member that has equity available in their own home. It is important to remember that, should the borrower default on their loan repayments, the guarantor’s security could be at risk. Talk to your lender
about the benefits and risks of using a guarantor.
Lenders Mortgage Insurance
If you meet your lenders requirements but don’t have a substantial deposit (usually 20%), Lenders Mortgage Insurance (LMI) can make it easier for you to secure a loan. LMI is a one-off cost paid by the borrower which protects the bank against any loss incurred if you’re unable to meet your loan repayments. While there are costs associated with LMI, it can be added to your loan amount and can help you to enter the property market sooner to start growing equity in your home. RACQ Bank’s Buying and Selling Calculator
can help you to determine LMI costs.
Banking and loan products are issued by Members Banking Group Limited ABN 83 087 651 054 AFSL and Australian credit licence 241195 trading as RACQ Bank. The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.