Planning to buy your first home? On average, it takes about five to six years to save a house deposit these days. But let’s be honest – who wants to wait that long? Fortunately, there are ways to fast-track the process and get you into your dream home sooner. Here are four strategies to help you speed things up and potentially beat the national average of 5.6 years.
1. Buy with Less than a 20% Deposit
Yes, buying a home with less than a 20% deposit is possible. Some lenders will accept a deposit as low as 10% and sometimes even 5%. However, if your deposit is below 20%, you’ll likely need to pay Lenders Mortgage Insurance (LMI), which protects the lender if you cannot repay your loan.
While LMI can add significant upfront costs (sometimes over $10,000), it might allow you to enter the market before property values rise even higher. You can even add the LMI to your loan and pay it off over time. If this option could work for you, we can help you explore the details and make an informed decision.
2. Have a Guarantor in Place
A guarantor – usually a family member like a parent – can use their home equity as additional security for your home loan. This can help you secure a loan without needing LMI; sometimes, you can borrow 100% of the home’s value.
Lenders prefer a solid savings history, ideally with at least a 5% deposit. If you have a family member willing to act as your guarantor, we can explain how this option can accelerate your path to homeownership.
3. Tap into the First Home Guarantee (FHG) Scheme
If you don’t have a guarantor, the First Home Guarantee (FHG) scheme might be a solution. With just a 5% deposit, the federal government will guarantee up to 15% of your loan, which means you won’t need to pay LMI.
This scheme can significantly reduce upfront costs, but places are limited, and eligibility criteria apply. Contact us to find out if this option could help you enter the market faster.
4. Use Your Super to Boost Your Savings
The First Home Super Saver Scheme can help you grow your deposit faster. By making voluntary contributions to your super, you can save up to 30% more than a standard savings account.
These contributions are taxed at only 15%, likely lower than your marginal income tax rate, allowing you to boost your savings more efficiently. When you’re ready to buy, you can withdraw up to $50,000 (or $100,000 if you’re buying with a partner) of the voluntary contributions, plus any associated earnings.
Why Fast-Tracking Matters
Remember, the national average of 5.6 years is based on today’s home prices. However, property prices could rise in the coming years, making saving the deposit you need harder if you wait too long. Acting sooner rather than later might save you money in the long run.
Ready to Fast-Track Your Deposit?
If you’re keen to get into your first home sooner, FirstPoint Mortgage Brokers can help. We’ll guide you through the best strategies for your situation and ensure you’re on the quickest path to homeownership. Contact us today to learn how we can make your homeownership dreams a reality!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice.
