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Buy your first home without a large cash deposit. Here’s how you can do it too

Buy your first home without a large cash deposit. Here’s how you can do it too

31 January 2018 MO'R Mortgage Options

If you’re having trouble saving enough money to buy your first home, maybe there’s another way…

But don’t panic just yet. We’re here to tell you there’s a few ways to buy your first home without needing to have a large cash deposit.

Here they are:

Family Guarantee Loan

Whilst a family guarantee loan isn’t suitable for everyone, because it reduces the amount of cash you need to save, it can help you to buy your first home sooner than you thought.  Find out more about family guarantee loans here.

Family Assistance

The family assistance we’re referring to here is a little more than getting your brother to carry the fridge down the staircase at your apartment block.

Here, we’re talking about a monetary gift (generally from your parents) that increases your savings. For a lender to consider these funds when assessing your loan application, you generally need to have a signed statement declaring the funds were provided as a gift only and in no way constitute a loan.

There can be some legal implications you may want to look into, but this type of family assistance is another way to get into your first home sooner.

Pay Lenders Mortgage Insurance

You don’t actually need to save 20% deposit. Most case studies use 20% in the calculation examples because it means you avoid paying Lenders Mortgage Insurance, you can save on costs and the example becomes much simpler.

However, many first home buyers pay Lenders Mortgage Insurance because it allows them to buy a house.

Lenders Mortgage Insurance does increase the costs.  However, if it allows you to buy your first home now rather than live with your parents for the next 5 years – only to discover in 5 years that house prices have gone up further and you’re still short your 20% deposit – paying Lenders Mortgage Insurance can be a good option.

Buy an investment property first

Whilst the dream is to move into  the house you buy, would you consider buying your first property as an investment? Depending on your current living situation, some first time buyers find that purchasing an investment property first can be a good option. Buy a property, use the rent to help cover loan repayments and hopefully the market will do the rest.

Over time, you’re hoping the value of this rental property increases and you can use the built up equity for your next purchase. Alternatively, there’s always the option to move into the property yourself at a later date.

Buy property with a family member

Buying property with a family member means you only need to save half a deposit, pay half the mortgage and cover half of the bills.  Sounds pretty good, right? Whilst it can introduce complications, in the right circumstances it’s a good strategy that can help you buy that home you’re so keen to get into.