28 Aug What to do where the place you live is unaffordable to buy in
Many Australians are finding it hard to afford to buy a home, especially when they have found the ideal suburb but a not-so-ideal price tag!
So you have saved your deposit, and keep saving – only to be shown that property prices are keeping out of reach. What do you do?
Review where you can live
Some of the suburbs just a 5 kms away from the ideal suburb may be within reach of your financial budget. Chances are if the neighbouring suburbs are slightly cheaper than the one/s you have been looking it, they may be due for a spiked growth rate. Domain have a nifty calculator that determines which suburb suits a client’s requirements, given facilities and budget – see the calculator here.
Even if you are locked into a certain area for your childs school, you can approach the school to see if there would be any detrimental effects of moving out of the area. It will mean a little longer in the car with your kids going to/fro school, but most schools will allow your kids to stay in the school once they are already attending.
Change the specifications of your needs
We all have needs and wants. From being a real estate agent for years prior to moving into finance, I found clients always had a list of requirements. Once they have been to a few properties, sometimes these requirements do chance. Quite often if I were taking around to properties that suited exactly what they told me they need, then I would put in a ‘wild card’ of a property that wasn’t quite what they had told me but one that I thought may just fit the bill – and 9 out of 10 times that was the one they bought.
People often say the need this and need that, but once they walk into a property that really is what they are after, they always look over their smaller priorities and often make excuses for not having it. “oh, we can do without this because we have that”. It’s all in the emotional journey of buying a home.
Live Where You Love, and Invest Where You Can Afford
Many people can’t afford to buy where they live, so they invest in an up and coming area, and stay where they are. Especially if they can secure a longer term lease on their current property, most landlords will be jumping for joy to have a secure tenant looking after their property (plus not so much wear and tear on their home when they move in and out every 6 months).
There are hot spots in every state, so you will need to do your research on finding a property that you think may be in the right zone for capital growth. Seek the services of a local real estate agent, take a trip to the area and really have a look from an investor point of view. Does it stack up to have everything a tenant could want? Is there any reason why someone wouldn’t want to live here? Services and transport closeby? Take the time to research this to ensure your money is well spent.
Some people consider a run-down or older style property that has potential to be that dream home one day. It may not look as modern now, but given some sweat and work it could do the trick!
It’s a great option if you are on a limited budget, and can afford a property that’s not quite up to your liking. It will be a work in progress, but it will be yours. And the personal touches that you can put into your renovation will make it even more precious to you.
Find A Guarantor
Guarantor loans are becoming more common now. With escalating housing prices in most capital cities, young people find it more difficult every year to be able to buy a home.
If your parents (or a close friend) has paid out their mortgage on their home (this can be the one they live in or an investment) they are able to be a guarantor to you. So an example of how this works is as follows:
If you found a property that you wanted to buy, but didn’t have the required 20% deposit
Purchase price of home $500,000
Required 20% deposit $100,000 (for bank requirements, so no LMI or Lenders Mortgage Insurance)
Guarantor Mortgage $100,000 as no deposit – parent’s property
Mortgage on property being purchased $400,000
So, there would be two mortgages on two properties, and the guarantor’s property would be the one paid out first, before your new property.
There are many things to consider here but it is one way for young people to get into the market. Most lenders will require 5% genuine savings being shown in your bank account for at least 3 months, so please check this first.
Sit and Wait
Some buyers are a little concerned about the heated marketplace for property and are reviewing the market trends. Property prices don’t always go upwards, and sometimes they plateau or head downward. But do you want to take the chance on missing the market by waiting? It’s good to get an expert to advise on this.
If you would like to consider your options and arrange a complimentary assessment on your finances to see how much you could borrow, please click on the link to book a time to chat to me.