How First Home Buyers Get Into Market
Perth property prices are falling, giving potential home buyers an opportunity to scoop up a bargain!
According to Western Australia’s real estate institute, REIWA the median house price in WA has fallen to its lowest since October 2013, which opens the door prospective buyers to jump into the market.
But scrambling together that deposit in a hurry is hard slog. We spoke to the experts about how Perth locals are breaking into the buying game.
OTHER SOURCES OF FUNDS
Many people are reaching for additional sources of funds to bridge the gap between what the bank is prepared to provide by way of a mortgage and what it really takes to get into the market.
"There's quite a proportion of first home buyers who can only get into the market thanks to the Bank of Mum and Dad,” says Digital Finance Analytics principal Martin North.
"If they don't have the Bank of Mum and Dad and they still need to get more money to get into the market there is a proportion of first time buyers who are going for the personal loan or going for the credit card or pretty much any source of funds that they can to try and get into the market."
BECOMING INVESTORS FIRST
There's been a trend for first-time buyers to become investors first, rather than owner occupiers. "They buy a cheaper property, not necessarily where they want to live, but at least that's a way into the market," Mr North says.
BUYING A NEW HOME
First home owners looking to buy or build a new home are able to apply for the First Home Owners Grant of up to $10,000. First home buyers can check out the range of single and double storey new homes (catering to all budgets) at companies like Summit Homes Group who can help build your dream home - and also have consultants to help with loan negotiation and application paperwork!
TEAMING UP WITH OTHERS
Mr North says some first home buyers are teaming up with others and it's not necessarily someone they know well. "I call them unholy alliances because you never quite know what's going to happen down the track but that's the other strategy that people are using."
BUY INSURANCE IF DEPOSIT LESS THAN 20 PCT
Lenders Mortgage Insurance (LMI) - covers the lender, not the borrower - and is generally required if someone does not have the standard 20 per cent deposit. Buyers still need at least five per cent of genuine savings.
GETTING PARENTS TO GO GUARANTORS
Mortgage broker Mortgage Choice spokesperson Jessica Darnbrough says there has been an increase in people getting their parents or siblings to go guarantors for a home loan to avoid paying LMI, moving from one per cent to about three per cent over the last two years.
Are there cracks in the walls inside or outside? This could be a sign of water leaks, or subsidence.
Is there bubbling or peeling paint? This is usually sign of a damp area.
Is there mould in the bathroom? That could be an issue with ventilation.
Does the house have heating and cooling?
Are the ceilings sagging?
Is the house built to current code standards?
Brought To You By Summit Homes Group.