Property prices in Australia are steeper than ever, and it’s tough for young, newlywed couples to get a home loan. Obtaining favourable terms is difficult even if you are single and want to remain independent! Whether you’re one or two, buying a house on a single income is quite a challenge. That said, it isn’t impossible!
Saving Up for a Deposit
One of the most significant barriers to entry into the Australian real estate market is the deposit. If you can’t put down a 20% deposit, then it’s immediately game over for you. Right?
In the first quarter of 2021, the median house price in Australia went up to $900,000. A 20% deposit means putting down $180,000 in cold, hard cash. Australians with that kind of money likely already have a house (or two) of their own.
Thankfully, there are still some options for you. Lenders Mortgage Insurance (LMI) is an additional sum charged for homeowners that can’t put down a 20% deposit. This insurance covers the lender in case the borrower cannot make their mortgage payments. This additional expense can be paid in a lump sum or built into your home loan.
LMI makes it possible to purchase a property with a 5% deposit, but you also need to worry about the additional cost. Adding several thousand dollars to your mortgage will surely incur a lot of interest over the years. However, LMI is worth it if you have no hope of catching up to rising property prices.
Taking Advantage of Home Buyer Incentives
If you are a first-time homebuyer, you can take advantage of many federal- and state-based incentives to get into the real estate market:
- First Home Loan Deposit Scheme (FHLDS) – In this program, eligible first home buyers can purchase or build a new home with a 5% deposit. For single people, your taxable income in the previous financial year must be below $125,000. There are property price caps set for different regions in the country.
- Family Home Guarantee – This is an extension of the FHLDS announced in May 2021. This program makes it possible for eligible single parents with dependents to purchase or build a new home with a 2% deposit.
- First home buyer assistance programs – Each state and territory also has grants, concessions, and other incentives for first home buyers. For example, the New South Wales government has a First Home Owner Grant program that offers $10,000 for people buying a newly built or substantially renovated home. The purchase price must not exceed $600,000.
Getting Your Finances in Order
Getting approved for a home loan primarily depends on your financial situation. As a single person, you need to prove that you will be a good borrower over your mortgage term. The best way to do this is to build good credit and save as much as you can. If you are disciplined with your finances, your financial details will bear that out, and soon enough, you’ll be able to buy your first home!
Many couples living in Australia cannot keep up with soaring property prices. This challenge is doubly difficult for single people who want to buy a home. Thankfully, there are many financial options and incentives for first home buyers who happen to be single. For a smooth home loan application process, you should partner with the best mortgage brokers dedicated to meet your needs.
Wealthy You offers the best home loans in Sydney. We simplify the mortgage process and help you purchase your first home. Along with low interest rates, we offer free legal consultation and direct access to real estate professionals to help you on your path to homeownership. Contact us today!