Tag Archives: deposit

How to help your children up the property ladder

How to help your children up the property ladderFor anyone trying to buy a home in today’s market, recent conditions aren’t particularly accommodating. According to the Housing Industry Association’s Affordability Report, the affordability index dropped by 6.4 per cent over the December quarter. This has pushed the rating to 75.6 (a score of 100 represents a balanced market). A mix of incredible price growth and a supply shortage has helped see to this.

In these circumstances, young first home buyers could find it tough to break into several city’s markets, and are often being priced out of their own region. If your kids are struggling to get a foot on the property ladder, there are a few ways you can lend a hand.

Let’s take a look at how you can do this:

Putting a deposit

CoreLogic’s monthly indices show that the average value of houses across Australia’s five biggest cities was $757,330 by the end of January. In Sydney, Australia’s densest city, this figure was a whopping $993,770. Clearly, buying real estate in Australia is more costly an affair than its ever been, making it a journey just to save for the initial down payment.

If you want to invest into the future of your children, why not give them a one-off cash gift that will go toward a deposit. Not only are you speeding up the saving process for them but keeping them motivated and with their eyes on the prize.

Put your home as collateral

For those picking up a home loan for the first time, lending conditions aren’t usually in their favour from the get-go. With no property of their own to put as collateral should things go south, they present a greater risk toward lenders.

If your child is in this situation, it can help immensely to put yourself forward as a guarantor. This means that you’ll put your own home down as collateral for the mortgage, which can help lower the minimum deposit that they have to commit by quite a bit. It could help them to buy a homeand get a foothold in the market much quicker, as well as keep them motivated.

The great thing is that it won’t cost you a cent, but can fast-track your child’s property journey significantly. However, there are obviously big risks to this. Just make sure they have the income and financial stability to make those repayments or you could, in the worst-case scenario, lose your home. Speak with a financial adviser to see if such an approach is right for you and your young adult.

Get serious about saving for a deposit

Get-serious-about-saving-for-a-deposit

Getting on the property ladder is something that features high on many people’s wish lists, but unless you’ve got a deposit saved up, this could well continue to be a pipe dream.

Whether you’re buying on your own or as a couple, making sure your finances are in check is the best way to have the best possible chance of securing a home loan.

Don’t expect your deposit to build up overnight – here are some ideas for making those little lifestyle changes that can lead to a big difference for your finances.

Set a budget

Budgeting skills are important in everyday life and this is especially the case when it comes to building up a deposit for your home.

Once you’ve got an idea of how much you need to save up you can set to work on putting a budget together that’s going to be easy to stick to.

Make sure you account for all those little extra expenses, including the coffee you regularly enjoy on the way to work and those sneaky drinks after work – they all take their toll on your finances in the long run.

Pay down debts

One aspect of your finances that lenders will look at is how much existing debt you have, which is why it’s so important to pay them down before making a mortgage application.

Pay off those credit cards, loans and anything else they might be able to hold against you. It’ll make the process a whole lot easier!

Set up a separate savings account

There’s just one problem with using your normal account for saving for a deposit – you might be tempted to dip into it now and again!

Having a totally separate account will remove this temptation and, if you play your cards right, you might even be able to find one that offers a decent rate of interest.

3 things every landlord should know

3-things-every-landlord-should-knowRenting out a property? It can sometimes seem like the tide is against you, but don’t fret. The exact laws will vary, but as a landlord you have a number of general rights and responsibilities that you should be aware of. Here are three of the most important things to remember.

1. Taking bond

Bond is your No. 1 safeguard against any damage to your rental property. You should take a bond from your tenants at the beginning of a lease as a security deposit, and it generally gets lodged with a government agency to be held on your behalf. In the case that the tenant breaks your agreement, you can make a claim to take some or all of the bond. This usually applies to major damage, not just your everyday wear-and-tear scenarios, so have a clear idea of what damage was or wasn’t there before the tenant moves in.

2. Doing repairs

Your tenants are usually responsible for keeping the property clean and tidy, but it depends on what’s outlined in the tenancy agreement. Be aware of any legislation and regulations surrounding your responsibilities as a landlord because they can vary. In any case, the property should meet all health and safety laws, and be sure to respond to any major issues like electrical mishaps or leaking taps immediately – otherwise you could end up with a large repair bill or in front of a disputes tribunal.

3. Should I stay or should I go?

You might own the property, but this isn’t license to come and go whenever you please. Respect your tenants’ privacy and personal items and your relationship should stay pleasant – a happy tenant equals a happy rental - but keep in mind both you and your tenants have distinct responsibilities to each other. You might have the right to enter the property every now and again, but it’s polite (and generally obligatory) to inform tenants when you are going to drop by for a routine inspection or to fix something.

Abiding by the general rules of renting will help to avoid problems, as well as making the experience a lot more enjoyable – for both you and your tenants!

How much do I need to save for a deposit?

SavingHomeDepositFor many first home buyers, getting their deposit in order is the first challenge to complete.

However, you may be asking yourself, how do I know when I’ve saved enough?

How much is your dream home?

Once you have an idea of the type of home you want to buy and where it will be located, start searching for comparable sales in the area for an idea of how much your home will cost. You can look up property price information online and visit local auctions to get a clearer picture of the current home price landscape.

How much can you borrow?

Chances are you’ll need help from a lender to afford your home. So your next step should be figuring out how much money you can borrow. This could vary from lender to lender, but in order to make sure you have an accurate idea of how much you can actually afford to borrow, calculate how much money you’d be able to devote to mortgage repayments each month.

What is your loan to value ratio (LVR)?

Your LVR is the amount of your home loan divided by the price of your property. Lenders will generally only loan you 80 per cent of the value of your home. However, LVRs of more than 80 per cent are possible to obtain, though these generally come with higher expenses and a requirement for lenders mortgage insurance (LMI).

Keep in mind that LMI will add to the money you need to save on top of your deposit.

In general, it’s a safe bet to plan on saving 20 per cent of the purchase price of your home for a deposit. However, how much 20 per cent will come to depends on the specific home you’re looking to buy.