First-home buyers seek help

The push to buy a first home means savers are getting creative, writes Sophie Elsworth

HOPEFUL first-home buyers desperate to save their first deposit are considering other ways than just stashing their own pool of cash.

New Galaxy research compiled on behalf of lender State Custodians has revealed while first-time buyers say saving a portion of their wage is the most common approach to getting a deposit together (39 per cent), pooling their funds with a spouse or partner is also popular (25 per cent) and getting an inheritance from parents or family (24 per cent).

The record-low interest rate environment and soaring house prices in recent years continue to push aspiring buyers further away from the reality of owning their own home. Lender State Custodians’ general manager Joanna Pretty said buyers are looking at a range of ways to get their deposit together in a shorter time period.

“We are noticing increasingly people are looking to pool resources or leverage resources from family, so parents who have done well in the real estate market and have equity in their house – first home buyers are looking to leverage from that,’’ she said.

“They are also having to look at other options such as buying property with friends and the old adage of ‘don’t mix friendship and money’ has gone out the window.”

New figures from lender ME also found strategies including purchasing a smaller than preferred property are popular (23 per cent), followed by purchasing in a less desired suburb (19 per cent) just to get a foot on the ladder.

Ms Pretty suggests savers start small and put away little chunks of cash before setting more realistic goals along the way of total amounts they aim to have saved. Often a 20 per cent deposit is the goal of entry-level buyers, otherwise they will be hit with hefty lenders’ mortgage insurance (LMI), which protects the lender, not the borrower, in case of default.

Loan Dolphin chief executive officer Ranin Mendis, who runs the mortgage bidding marketplace, said setting up a good, strict budget and sticking to it is the key to success.

“It’s all about planning but most importantly execution – setting realistic budgets and saving plans and achieving these,’’ he said.

“It’s always great to have the bank of mum and dad to help with deposits but getting a mortgage is just the start– borrowers need to repay that mortgage to the bank which is a serious long-term commitment.”