3 Ways First Home Buyers Can

Get into the Property Market Sooner

Owning a home is a key goal for many first home buyers. To get there sooner, consider the Bank of Mum and Dad, State Government assistance, or co-buying with family or friends.

 

Bank of Mum and Dad 

In the past 20 years, financial support from family or friends has doubled, making the “Bank of Mum and Dad” one of Australia’s largest mortgage lenders.

While this trend may be helpful for first home buyers in speeding up the home buying process, it does raise concerns around the long-term implications for the parents providing financial support. Before deciding to provide financial assistance, it’s important to carefully assess any future financial risk. 

Financial support from family or friends helps first home buyers access funds, avoid LMI, and enter the market faster.

 

Family or friends can provide a: 

• Gifted deposit: Parents or family members may gift funds to help cover part of the deposit required when buying a first home. 

• Family guarantee: As guarantor, parents may use the equity in their own property as security for the home loan. But if the borrower defaults, the guarantor is required to repay the loan and could be at risk of losing their own property. 

Assistance from State Governments 

Across Australia, State Governments provide a range of grants and schemes aimed at helping first home buyers get into the property market. With financial incentives and support to make home ownership more attainable. 

These schemes help reduce the high costs of buying a home, benefiting lower-income individuals and those struggling to save a large deposit.

Since grants and schemes vary by state, it’s essential to review eligibility and seek financial advice to explore your options.

Grants or incentives available to eligible first home buyers include:

• First Home Owner Grant: A one-off payment to help offset the cost of buying a home, amounts vary from state to state.
• First Home Guarantee: Guarantees part of a home loan so first home buyers or previous homeowners who haven’t owned in the past ten years, can buy a home with as little as 5% deposit without paying LMI. Your mortgage broker will help you apply for any of the Home Guarantee Schemes
• Stamp Duty Concessions: Discounts or exemptions on stamp duty with amounts and eligibility criteria varying from state to state.
• Shared Equity Schemes: Help to Buy provides an equity contribution of up to 40% for new homes and 30% for existing homes.

Buying with Family or Friends 

Co-buying a property by pooling resources with family or friends is another way to boost purchasing power and get into the property market sooner. It involves combining incomes and savings to increase borrowing capacity, while at the same time sharing the burden of mortgage repayments and ongoing expenses. 

Co-buying makes homeownership more affordable but carries legal and relational risks. Seeking financial advice and understanding pitfalls is key to success.

Co-buying may be accessed in the following ways: 

• Joint ownership: Buying a property with one or more friends or family members and sharing ownership and responsibilities having separate loans. 

• Tenants in common: Each buyer owns a specific share of the property, which can be divided unequally based on individual contributions. 

• Co-borrowing: Applying for a joint home loan, with all parties listed as borrowers and jointly responsible for mortgage repayments. 

The right support from Lending Connections 

Entering the property market as a first home buyer can be tough, but with the right support, it’s possible.

If you are considering buying your first home and would like help exploring lending options, contact a Lending Connections mortgage broker today. Our expert brokers help first home buyers navigate the market with tailored mortgage advice.