First Home Buyers
The Catapult Property Group is all about helping Australians achieve their dream of owning their own home. But we understand how hard it can be to come up with a deposit, and that’s why we have developed a product to take the stress out of saving to buy a new home.
The steps on your journey to property ownership require you to:
- Work out where you want to live
- Check your comfortable affordability (your budget or borrowing capacity)
- Talk to a mortgage specialist
- Find your new home
- Sign the contracts to secure your new home
- Complete the paperwork for the loan and purchase
- Settle the new purchase, and either move in or start building
- Protect your new home and your income.
At every stage, you are going to be offered advice and information from well-meaning friends or family members. So who should you turn to?
Our team at the Catapult Property Group has over 100 years’ combined experience in property and finance. We can guide you through every step. The advice and information we offer isn’t just opinion, but based on property economics and our extensive experience helping people on their property journey.
We also develop property and finance solutions based upon your individual goals and dreams. You will not only know what is happening at every stage of your buying journey, but why it is happening.
Myths about home ownership
Buying a home is one of the biggest, and best, financial decisions anyone can make. It provides you and your family with a home, but also financial security.
But for many Australians, the dream of owning their own home has been just that; a dream. In recent news articles, it has been reported that more than one third of young people do not see any way they can buy their first home.
There are many sound reasons to buy a home, but as a first home buyer it’s hard to know who to turn to for advice and information.
And even when you have all these questions answered, and you’re ready to take that big step, the biggest hurdle presents itself…
Having enough of a deposit for the bank to approve your loan.
There are many so-called ‘experts’ who may offer advice or opinion when you’re looking for help.
Let’s explore some of the myths that you may hear on your property journey.
You need a 20% deposit to buy your first home
You may have heard that you need at least a 20% deposit to enter the property market – plus fees. For a $450,000 home, this would mean you need nearly $100,000 in a bank account before you can purchase.
This is not true. It is often advised by some ‘experts’ simply so you avoid mortgage insurance, payable if you don’t have the 20% deposit.
Mortgage insurance on a $450,000 home purchase with a minimal deposit usually ranges from $7,000 to $14,000. So, instead of aiming to save a potentially unattainable amount of $100,000 for a 20% deposit over many years – while property prices continue to climb – this amount is simply added to your mortgage.
There are a large number of banks that are happy to finance a purchase from as little as a 5% deposit, and in some cases, even less.
- Here’s all you need to get started:
As little as $2,000 of your own savings – for the deposit – when working with property specialists that have the builder, broker and financial advisors under the one roof, such as Catapult Property Group.
- A full time job. Lenders love stable and long-term employment. A permanent and full-time position is ideal, or even part time or casual work can be used in some cases.
- 12-month rental history. A recorded and consistent rental payment history will get a big tick of approval from a number of lenders, as it shows your ability to make a home loan repayment.
- Clear credit history. A credit report shows how well you can manage your finances, and late payments and dishonours can affect a lender’s decision. You may still be able to proceed, but will likely need to address any defaults before you apply for your new loan.
You should wait for the housing market to crash like it did in America and then buy a bargain
The Global Financial Crisis was nearly 10 years ago, and the Australian property market was able to withstand that event. The property market in Australia is completely different to that of many other countries. Australia has a growing population from immigration, and the price of properties is driven by many factors including the demand.
With an average annual growth of over 8% for the last 40 years, property still makes for a sound investment.
Don't buy. Keep renting because it's cheaper
From time to time, an ‘expert’ will make the claim that renting and investing your savings can be more financially beneficial than owning your own home. This may be true in some very rare cases, but it would require you to have a carefully managed financial plan that you researched, implemented and stuck to when you were young.
Many young Australians do not possess the financial skills to manage this, and would likely end up a lot worse if they followed this advice. Owning your own home has many financial benefits, like being exempt from capital gains tax. More importantly, it offers security and a strong financial base for you to build wealth upon.
Many renters feel that it’s too hard to get into the market, and then the ongoing costs can make it unaffordable.
Time to get started
Every day you put off making the decision to buy your new home, two things happen:
- You keep paying rent to your landlord, and we have already shown how that is dead money, and
- Prices rise, making your new home even further out of reach.
Often, we are asked, ‘when is the best time to buy property?’
The answer is yesterday. The second-best time to buy is right now.
Interest rates are at a historical low and government grants are available to help people into the property market. Getting into your new home has never been easier.
So, now it’s time to address some of the questions you may have about entering the property market.
If I buy, which area should I choose to live in?
Buying your own home is a personal decision that has many influencing factors. Where you live and what type of property you buy can be influenced by:
- Where you work
- How long it takes to get to work
- Where your family lives
- If you have children, where they go to school
- If you want to live in a catchment for a certain school
- Proximity to shops, entertainment or transport.
These are just some of the factors that can affect your decision. Start by making a list of suburbs or areas that will achieve most of these objectives.
Once you’ve shortlisted these areas, then consider the type or style of property. Do you want a house and land, townhouse, or unit? The answer can depend on the size of your family, your lifestyle, and your budget.
What is my budget?
Unless you are fortunate enough to have either been given or earned a large amount of money, then you’ll need a home loan to help you buy your new home.
In Australia, there are over 300 banks, building societies and credit unions all looking for your business. But each one of those has specific lending criteria and requirements that they may not tell you about.
They will talk about their service and interest rates and why they are best suited for you, but how can you tell? No matter how good their loan may appear, each lender can only recommend from their own limited range of loans.
A mortgage broker will have access to a wide variety of lenders. With their knowledge of the market, they can make recommendations for loan products that are specifically tailored for your circumstances.
How your first home can help you achieve your long-term goals
Your property journey doesn’t have to end with just one home. This may be your first home, but it won’t necessarily be your last.
When you work with the team at Catapult Property Group, we will continue to show you how you can use the equity in your new home to leverage into further properties.
We can show you how to reduce your mortgage faster and build more equity in your new home. In addition, many of the financiers that we work with will allow an annual revaluation of your home.