Which Strategy Is Best for Breaking Into The Market?

There are many different options and strategies that first home buyers can use to enter the market. Including guarantor loan, using government incentives and rentvesting, just to name a few. Depending on one’s financial capacity and serviceability, along with whether they are purchasing alone or with someone. Will present different strategies to break into the market. Let’s explore these 3 strategies in further detail. 

Guarantor Loan

A guarantor loan allows you to purchase a home using someone else’s property as security, which alleviates the need of needing a big deposit. Utilising your parent’s property can help you secure a property for yourself. You can enter the property market and start making growth in property equity, which overtime will make you closer to owning your home.

Using a guarantor loan avoids paying lender’s mortgage insurance, and can help buyers get into the market sooner. Buyers also have the option to remove their guarantor later down the track. A risk of having a guarantor is that there’s a limited amount of lenders that will lend. More severely, not meeting repayments can put your guarantors’ home at risk. 

Government Incentives

First home buyers are encouraged to take advantage of government grants to help them get into the market sooner. In South Australia, first home buyers may be eligible for a $15,000 grant if they are building or buying a new home. 

Click here, to see if you’re eligible for the First Home Owner’s Grant.

“To make the most of government grants, we encourage first home buyers to purchase off the plan house and land packages. Buyer’s are required to only pay stamp duty on the land and can get a loan with as little as 5% deposit in some cases. Making it much easier for them to enter the market”, says Nidal Rasheed, Founder and Managing Director of Silvertail Property Group.

There are many other government grants and schemes first home buyers can take advantage of such as the Labor Party’s Help to Buy Scheme as well as the First Home Super Saver Scheme (FHSS). Speaking with a property expert like Mr. Rasheed can make you aware of the government grants and schemes you could be eligible for. 

Rentvesting

In simple terms, rentvesting is when a person rents in an area that suits their lifestyle and owns an investment property in an area that suits their budget. It’s a win win situation, as the person gets to live in their desired area while also owning a property in another.

For example, if you can’t afford to buy a property in the area you desire to live in. Buying in an area that’s suitable for your budget will allow you to get into the market sooner, which will allow you to start building equity. In the future, you’ll be able to use this equity to buy a property in your desired area.

In the meantime, while buying in that area is out of your price range, you can still rent there. So, you still get to live in the area you want, while owning a property elsewhere.

As you’ll be collecting rent from your investment property as well, this can contribute to mortgage repayments. Even better, if you have extra money from rent collected, you can use this for your own rent!

To Conclude

At Silvertail Property Group, we recommend our clients to chat with a mortgage broker to assess their borrowing capacity. From there, knowing a client’s serviceability and financial capacity allows us to advise which strategies are best suited for them. Finance is the biggest hurdle to purchase a property, and there is no one size fits all strategy. It’s best to chat with a property expert like Silvertail to assess your options and a mortgage broker to assess your borrowing capacity. 

For more information, visit www.silvertailpropertygroup.com.au or follow Silvertail Property Group on Facebook, Instagram, LinkedIn and TikTok. 

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