Many Queenslanders dream about owning a home on the Gold Coast, but they often worry that it is out of their financial reach. You may have thought about purchasing a Gold Coast property that ticks all the right boxes for your lifestyle but have been put off by that 20% deposit you hear about. However, do you really need to worry about this, or are other options available that could turn that dream into a reality?
Loan to Value
With home prices being so high at the moment, it may often be difficult for first-time buyers to find as much as one-fifth of the property’s value. Many lenders do prefer a loan to value ratio of 80%. This means that you would need to find $150,000 to get the keys to a Gold Coast gem costing $750,000.
Other Costs to Consider
And don’t forget, you will also need to consider some upfront costs that would be over and above the deposit amount. For example, you may need to pay for stamp duty (which is basically a tax on your purchase), although the state of Queensland does offer a first home concession for any home with a value less than $550,000.
You should also factor in costs of building inspections, utility connections, removalists and any legal or conveyancing fees. You cannot add these to the cost of borrowing, so you will have to put some money aside here as well.
Still, it’s not all bad news, as you may well be able to buy your home with a much smaller deposit.
The First Home Loan Deposit Scheme
The Australian government has a First Home Loan Deposit Scheme. This program is available for up to 10,000 first homebuyers across the country per year and means that you could buy that home with as little as a 5% deposit. To take advantage of the offer, you will need to buy lenders mortgage insurance and part of the transaction will be guaranteed by the NHFIC. This guarantee will cover up to a maximum of 50% of the property’s value, as assessed by the lender. So, rather than having to find that $150,000 for your Gold Coast property, you’d only need to put forward $37,500.
To be eligible, the property must be classified as “residential.” It could be an existing house, apartment or townhouse, a house and land package, land with permission to build a home or an off-the-plan property.
Additional Government Programs
You may also be able to take advantage of a New Home Guarantee or a Family Home Guarantee, both schemes run by the Australian government. These programs can support you in building or buying a new home (in the first case) or help you buy a family home with a deposit of as little as 2% if you are an eligible single parent with at least one dependent child.
Other alternatives if you don’t have the full 20% deposit
There are other options in getting a home loan without the full 20% deposit. These include:
- Paying for Lenders Mortgage Insurance (LMI) – You can pay as little as 5% deposit and have the LMI amount rolled into the mortgage that you will pay off over time
- Family guarantee – a close family member may be able to help you by using the equity in their home to provide your lender with additional security for your loan.
Getting Further Advice
If you’re not sure how to proceed, reach out to us here at Professional Lending Solutions. Contact us today and we can help you understand what is available to you to put a plan in place to get your buying property sooner.