Planning to buy your first home? On average, it currently takes around five to six years to save for a deposit. But who has the patience to wait that long? Today, we’ll explore four ways to speed up your path to home ownership.
The saying goes, "patience is a virtue." But in a competitive property market, waiting might not be the best approach for eager buyers. Let’s set aside patience for a moment and dive into strategies to help you save faster than the national average of 5.6 years when it comes to building your house deposit.
1. Buy With Less Than a 20% Deposit
It’s possible to buy a property with a deposit smaller than 20%. Some lenders may accept a 10% deposit, and in some cases, you could even get away with just 5%.
The catch? When your deposit is less than 20%, you’ll typically need to pay Lenders Mortgage Insurance (LMI) unless you qualify for the scheme discussed in option three below.
LMI protects the lender (not the buyer) in case repayments fall through. The premium can be costly, potentially adding over $10,000 to the upfront purchase cost. However, many people add LMI to their home loan, allowing them to pay it off gradually. While this increases your repayments and interest, it allows you to enter the market sooner, before property prices potentially rise even further.
For some first-time buyers, this solution works well. We can help you explore if this option is suitable for your situation, whether you're in Townsville, Brisbane, Gold Coast or elsewhere in Queensland.
2. Consider a Guarantor
A guarantor—often a close family member like a parent—can provide extra security for your home loan. This usually involves using the guarantor's home equity as collateral, without them needing to hand over any cash.
With a guarantor, you might be able to borrow up to 100% of the property’s value without needing to pay LMI. However, lenders typically prefer to see that you have saved at least 5% of the deposit yourself.
If a family member is willing to act as your guarantor, get in touch to discuss the best mortgage broker in Townsville, Brisbane, Gold Coast, Sunshine Coast in Queensland, Australia who can guide you through the available loan options.
3. Utilise the First Home Guarantee Scheme
No guarantor? No problem. If you’ve saved a 5% deposit, you might be eligible for the First Home Guarantee (FHG) scheme, where the federal government guarantees up to 15% of your loan.
This doesn’t mean a cash payment, but it does allow you to get a loan with just a 5% deposit without needing to pay LMI. Keep in mind that spots in the FHG scheme are limited, and you must meet eligibility requirements. We can help determine whether this scheme could fast-track your home-buying process.
4. Use Your Super to Accelerate Savings
Another option to consider is the First Home Super Saver Scheme. According to the federal government, this scheme could help you boost your deposit savings by up to 30% compared to a regular savings account.
By making voluntary contributions of up to $15,000 annually into your super fund (which is taxed at only 15%, lower than most income tax rates), you can benefit from potentially higher investment returns. When you're ready to buy, you can withdraw up to $50,000 in voluntary contributions (plus any earnings). If you're purchasing with a partner, you can both withdraw up to $100,000 combined, plus any earnings.
Why Speeding Up Your Deposit Matters
Finally, it’s important to remember that PropTrack’s national average of 5.6 years is based on today’s median home prices with a 20% deposit. However, if property prices continue to rise, the deposit amount required could be even higher in the coming years.
The takeaway? The sooner you act, the better off you may be in securing your dream home.
If you’re ready to take the next step, whether it’s finding the best mortgage broker in Townsville, Brisbane, Gold Coast, Sunshine Coast in Queensland, Australia or exploring refinancing in Townsville, we’re here to help. Reach out today, and we’ll discuss which strategy suits you best.
To learn more, contact Premium Finance Group Australia at (07) 4720 8888 or email us at finance@pfga.com.au.
Disclaimer: The content of this article is general and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your situation and may not be relevant to circumstances. Before taking any action, consider your particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.
