The thought crosses most Australians minds at least once in their life - "how great would it be to own my own home?" Making your first step onto the property ladder can be daunting experience, especially if you're used to renting.
Upgrade to homeownership
However, there are a number of reasons why upgrading to homeownership could be a good move for you.
While you're living in a rental property, you have very little control over what you can do in the property. Because you don't own the roof over your head, any renovations you want to make, no matter how minor, need to be run past your landlord beforehand.
Even something as simple as putting up a picture frame on the wall could be grounds for your landlord to charge you a fine, or in extreme cases, evict you.
Furthermore, all that money you're putting towards your monthly rent is a sunk cost - you'll never see any sort of return for that cash.
While this is a necessary expenditure to stay in the place you live and may not affect you in the short term, it will accumulate over time and you'll have nothing to show for it.
Your landlord can also increase the price of your rent at his or her whim, which could put you into a sticky situation. If you buy your own home, you have the chance to get a fixed rate home loan, which means your monthly repayments will always remain the same.
Investing in your own property will allow you to begin building up equity and put you into a better financial standing in the long run.
Home loan options
Aside from having the freedom to make renovations to your home without asking permission (except, perhaps, from your partner), there are a number of other benefits to owning your own home.
Not only does value accrue on your home, you could also be eligible for a tax break on the interest you've paid on your home loan throughout the year. The principal you pay on your mortgage is also money in the bank, in the form of equity.
If you've decided to pursue homeownership, there are a number of options available to help you achieve your property goals.
Saving for a home loan can be difficult if you're paying rent and other expenses at the same time. But this is where a low deposit home loan can come in handy.
Some lenders allow borrowers to take out up to 95 per cent of a property's total value.
Understandably, there is a lot of work to go through when applying for this type of loan - lenders need to ensure they are loaning to someone who will be able to make repayments in full and on time.
One of the documents they will require is evidence of punctual payments. This is usually in the form of a continuous 12 months of rental payments with no interruption or fluctuation.
Another option available to you is a family equity loan, also known as a limited guarantor loan. This type of loan allows a member of your family to help out with the cost of your home loan by using their property as security for your application.
Their contribution is usually around 20 per cent of the overall property cost, which can help to get you significantly closer to your goal.
Because there are so many options available for you, having a chat with a mortgage broker could come in handy.
Speaking with a home loan professional will help you wrap your head around the options available to you and make the right decision for your circumstances.
