Anyone who has thought about purchasing their own home in recent months would know that it is no mean feat – particularly for first home buyers.

Rising interest rates, inflation, the cost of living crisis and soaring house prices are just some of the many factors making it harder than ever for young Aussies to get into the property market.

On top of this, there are a number of misconceptions around buying your first home that could also be stopping young people from taking that leap.

Before seeking professional advice, there are many potential buyers who may be under the impression that they need to save for a higher deposit than they actually do.

In some cases, people can purchase a home with as little as a five per cent deposit, or even less if the buyer fits into a specific category.

Business owner and Mortgage Choice Balmain broker, Terri Unwin, told news.com.au that the first home buyers she speaks two generally fall into two categories.

“There is one group that don’t realise what options are available to them. Whether it be the five per cent deposit, or if they’re in an essential service like teaching or nursing they can get in with as little as three per cent,” she said, adding there was also the option of their parents using equity in their property to guarantor them.

“So some of them aren’t aware that there are other avenues to get in other than just saving the deposit themselves.”

New stamp duty changes came into effect on July 1 that can also help out first home buyers.

The reduced stamp duty rates on homes valued at $800,001 to $1m will operate on a sliding scale, with the benefits reducing the pricier a property is.

Under the new rates, an $850,000 property will incur a stamp duty tax of $10,023 instead of $33,340 – saving buyers $23,318.

Homeowners will save just $1555 under new concessions on a home purchased for $990,000, with stamp duty reduced from $39,640 to $38,086.

Previously stamp duty exemptions only apply to homes under $650,000.

Ms Unwin said then there are those buyers who are on the opposite end of the spectrum and think they’re entitled to everything, but, in reality, don’t qualify for any of it.

She said she has had people call her and inform her they are going to buy with a five per cent deposit, but when she actually goes through their finances she had to inform them that wasn’t going to happen.

“Once you go through it, they’re earning too much money, they’ve bought previously or with an ex partner or something,” the mortgage broker said.

While young people thinking they need a higher deposit than they actually do is one of the big misconceptions Ms Unwin sees that can make first homebuyers hesitant, people being wrong about what concessions they are actually entitled to can also majorly delay a purchase for someone trying to enter the housing market.

She said the use of online calculators to determine your borrowing capacity can also make people believe they are entitled to a larger loan as the bank’s assessment rate is not considered in those calculations.

“One of the things we work on is starting from day one, where are you right now? What’s your borrowing capacity as it is today?” she said.

“Let’s look at clearing the credit card debt and stopping all those after pays and zip pays. And if you can do that in three months time, this is what your position looks like.

“At that point, if you can pay off your car in six months time, this is what your position would look like. And so a lot of it is around educating them.”

However, Ms Unwin urged first homebuyers not to give up hope if they find the process of buying a home is a longer road than they expected.

“I’ve got clients that it takes two years from the time they initially have a conversation to when they are in that position to purchase because we put a plan in place for them and check in every six months,” she said.

”Just don’t give up. It’s difficult. It’s a no now, but don’t lose hope and then go ‘Oh, I’m just going go and spend all that money on a holiday or buy brand new car.’”

The biggest piece of advice Ms Unwin gives her clients is to start living like they already have the mortgage they are working towards.

This means, if you are renting, working out the different between your rent and what your mortgage repayments will be and put that money away in a completely separate account and don’t touch it.

She said this can help people to realise whether they can actually afford the mortgage they want to get.

“They might think they want to buy a property for $1.1 million but when they realise how much they’ve got to put away each month, it can help them go ‘Well okay, the bank might give me that amount of money, but do I really want to be living in the situation where I’m not actually enjoying my life?’” she said.

This may then convince the buyer to look for a cheaper property with repayments that will be easier to sustain in the long term.

Another trend that Ms Unwin has seen is a rise in single females entering the property market on their own.

“That’s one group I would love to reach out to and just say get some advice, see where you are. It’s not unachievable for you to do it on your own, so don’t just assume that because you’re on your own you can’t do it,” she said.

“I think very much the single female first homebuyer is a group that just need a little bit more confidence and empowering to know that they can do it.”



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By Rahul

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