6 ways to fast-track your property deposit

With recent property growth across most Australian cities, it seems an almost impossible task for many first home buyers to save up the necessary deposit. Even when considering a reasonably modest purchase in today’s world of $500,000, cash savings of at least $70,000 is required to fund a 10% deposit plus purchase costs.

While for some, putting away those few hundred dollars each week will be the only way forward, at Orium Finance we know there are other ways to fast-track the initial deposit.

Gift from family member

Those lucky enough to have family in a strong financial position, can ask for assistance when it comes to the initial deposit. Often the major barrier to entry is our reluctance to ask, as family matters can be complicated. Just remember that often those who care about you the most are also willing to assist you get ahead in life. These days’ loans can even be structured to protect the initial deposit provided by the family member.

Parental Guarantor loan

As can be the case, parents may wish to help a son or a daughter, but just don’t have the spare cash lying around or are no longer working and able to borrow the deposit. With a parental guarantor loan, a family member can access the initial deposit from equity available on their parent’s property. There can be some restrictions when it comes to this type of loan, however, this can be a great way to get on the ladder without actually requiring liquid cash for the deposit

SMSF loan

Those with enough funds in their super to purchase a property, have traditionally been working for a number of years. It’s not uncommon these days to see people with no property assets outside of superannuation, however they may have built up a significant superannuation balance. These types of clients can potentially use their superannuation savings to purchase a property via a Self-Managed Super Fund. Based on the current lending environment a deposit of 30%-40% is required to access additional bank borrowing, however, this could be a genuine pathway to accessing a property.

Pooled funds

Sometimes the combined efforts of a few can be greater than the individual efforts of many. Property is no different. Getting on the property ladder sooner by pooling funds with friends and/or family members, can provide long term advantages to those involved. Obviously, here are some considerations to this strategy. One of the more important points is that all purchasers have similar objectives at entry and an exit strategy is agreed in advance.

Special terms for qualified professionals

A number of banks recognise that certain professions such as doctors, accountants or lawyers are both well paid and reliable borrowers. As a result, a number of lenders will reward borrowers with specific qualifications by allowing them to access a higher percentage of debt, without the requirement to pay a Lenders Mortgage Insurance (LMI) premium. This saving could be the difference between purchasing or not purchasing a specific property.

Government assistance

Most of us know that from time to time State or Federal Governments offer contributions towards deposits and/or stamp duty in order to boost housing affordability. These types of incentives are often aligned to first home buyers, however some incentives include investors. For example, the Victorian State Government is currently offering a deposit contribution of up to $20,000, depending on the type of purchaser, location and purchase price.  Check your individual state and federal incentives to understand what free money could be accessible.