Fresh ways to buy your first home
FIRST home saving strategies are getting freaky.
Stashing cash in the bank no longer works well because crappy interest rates for cash deposits - at around 2 per cent - mean that savers lose money from bank deposit accounts after inflation and tax take a bite.
So that means thinking outside the square, and there's a growing list of strategies to help get a foot in the door.
Brothers and sisters have been pooling their resources to buy their first property combined, either as an investment or to live in together.
Tougher lending rules make it increasingly difficult for an individual to have enough deposit and income to get loan approval on their own. And with many people delaying marriage until their 30s, sharing siblings is a trend tipped to grow.
BANK OF MUM AND DAD
Parents aren't sharing property ownership but many are still going guarantor by stumping up their own home equity for their children's loans.
Advisers warn that this strategy needs to be thought through carefully as it's putting the parents' biggest asset at risk if something goes wrong and the loan can't be repaid.
Perhaps the biggest benefit of the Bank of Mum and Dad is providing financial support for adult children still living at home. Kids can save much faster if they're not having to worry about rent, utility costs and other household bills.
FIRST-HOME SUPER SAVER SCHEME
This government incentive, introduced in 2017, allows people to save for a home deposit within superannuation so they can benefit from super's tax breaks, and then withdraw this portion of their super savings later.
However, there are some strict and confusing rules.
You can only contribute up to $15,000 in any one year and total contributions under this scheme are limited to $30,000 - which won't be enough for a full deposit for most people wanting to avoid expensive lenders mortgage insurance.
This scheme is not attracting huge attention from savers. Like everything super-related, it sadly sits in the too-hard basket.
New investment platforms such as BrickX and DomaCom allow people to buy small pieces of an individual investment property, often for less than $100, and share in that property's growth, rental income and expenses.
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This strategy means that the savers won't get caught out by rising house prices because they're already in the market, albeit in a small way. But be careful to check the property valuation and suburb outlook to make sure the deal stacks up.
NEW LOAN PRODUCTS
Lenders are coming up with all sorts of ways to help people into property ownership.
Many are smaller players or government organisations, such as South Australia's HomeStart, and offer a variety of low-deposit loans and other products for first home savers.
HomeStart's options include graduate loans with deposits as low as 3 per cent and no lenders mortgage insurance, interest-free loans to pay for establishment costs, and shared equity schemes where the lender takes a slice of the home and shares in its growth.