How to Get into the Property Market Sooner
Many people would prefer to get into the property market sooner rather than later, and for good reason. Investing in property is like investing in anything else – the longer it takes to get in, the less financial reward you reap.
For starters, owning property comes with tax benefits that can save you thousands of dollars. Repairs, depreciation, insurance and more can be deducted from your taxable income.
In addition, getting into the property market sooner could afford you the chance to avoid rising interest rates while your property increases in value. With a fixed interest home loan, for example, you could be paying the same low interest rate throughout the life of the loan regardless of market deviation.
Stepping into the property market
Although there are always options available, entering the property market can feel challenging. Many people look at the rise in property prices and other factors and wind up discouraged.
Furthermore, a typical deposit of 20% on the price of a property would, in many cases, require you to save six figures. If you’re unaware of the other options available to you, that fact alone could turn you off buying property altogether.
Luckily, if you’re set on entering the property market and you want to reap the rewards of doing it sooner, you have some very good options:
Lenders Mortgage Insurance
With Lenders Mortgage Insurance (or LMI), you can borrow a higher percentage of a property’s purchase price than you’d otherwise be able to. This means that you won’t have to save as much for a sufficient deposit.
In addition to requiring a smaller deposit, LMI may allow you to take on a home loan with poor credit. With LMI approved, lenders tend to be more forgiving and flexible because conditions are more secure.
Low deposit home loans
A low deposit home loan allows you to jump straight into the property market with just a small deposit saved. You can get pre-approval and begin house hunting far sooner than you might expect, especially when you consider the years it would take to save a sizeable deposit with outgoing rental expenses.
Interest only home loans
Interest-only home loans can help you get into the market with minimal investments. For a set time period, you only pay the interest on your mortgage (and nothing else). Typically, this period lasts a few years. You would then pay a lump sum after the term ends.
If you already have a certain amount of funds, then the lower repayments can help you free up cash flow for other things.
While it is possible that an increase in the property’s value will cover the principal component of your home loan further down the track, ensure you weigh the options carefully.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.