4 Ways to get into your first home

There are 4 ways to get the finance to get into your first home.

  1. Genuine savings is the first. This refers to the amount of money you have saved over time.To be eligible for Bank approval in this area you will need to have saved up 5% of the purchase price of the property you want to buy. Lenders have different criteria when it comes down to what actually qualifies as genuine savings. Most will allow savings, shares or term deposits held for 3 months. Gifts & inheritances are 2 areas that lenders generally won't allow under this policy. You will need access to additional funds in addition to the 5% to meet costs associated with purchase
  2. Rental option. Many people struggle to save as much as they would like when they are paying rent at the same time as trying to save. Lenders have developed a rental option policy that allows for this. You will still need a deposit, however if you have been renting through a Real Estate agent lenders may view this favourably & waive the genuine savings (above) criteria. Again, lender policies vary however most require to see 6 months rental history.
  3. Non genuine savings. This policy is a variation of the above 2. On basis you can come up with 10% of the purchase price lenders may waive both of the above requirements. For some lenders this can come from any source so gifts & inheritances are allowed.
  4. Family guarantee. Your family members may be able to use equity in their property to provide additional security for a home loan under family guarantee. The guarantee and security is limited to a portion of the home loan (commonly up to 20%). Policies vary however family members who may be able to help are parents (including step and in-law), spouse, de-facto, grandparents, siblings, children, brother in law or sister in law. The family guarantee reduces or eliminates the requirement to pay expensive Lender's Mortgage Insurance.