It’s often said that the hardest part of building a sustainable property portfolio is accumulating a deposit for that first property. Here’s a lateral-thinking option that just might enable you to get your money working harder real soon.
Experienced mortgage broker, David Hoar of Home Loans Newcastle, says there’s a large number of wannabe property buyers who are unaware of the Family Equity option and how it can help them get on to the property ladder sooner, save money, and get their money working harder.
“Saving a big enough deposit to buy that first property is often a very long process, especially for younger people who may have spent time travelling, studying, paying for a wedding, or ‘finding’ themselves,” said Mr Hoar.
The old-fashioned way to buying property involved saving a 20 per cent deposit and acquiring a home loan for the rest. To accelerate the process, it’s become increasingly more common for property buyers to purchase with a smaller deposit while satisfying lender’s security requirements by paying a one-off insurance premium known as Lenders Mortgage Insurance (LMI).
WHAT IS A FAMILY EQUITY LOAN?
A family equity loan essentially means, in lieu of a property buyer satisfying a lender’s standard 20 per cent equity requirement, a third party (usually a family member) assists the buyer by providing a security guarantee.
CAN I BUY AN INVESTMENT PROPERTY WITHOUT A DEPOSIT?
If your first property is an investment, some lenders will allow you to use a Family Security Guarantee to help you buy with a small or no deposit.
To read answers to more questions and the rest of this article written by David Hoar, click on the links below.
By David Hoar