If you are a first home buyer who cannot imagine owning your own home, based on banking inquiries and rumours about tighter lending, think again.
Here are some key facts:
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which began last year and has handed down its preliminary findings, does not mean you cannot qualify for your first home loan.
Secondly, you do not need a whopping big deposit. Yes, you do have to have a record of saving, but in all probability, you qualify for a loan with much less than you suspect.
Thirdly, lending to first home buyers in Canberra hit a spike in the early part of this year. At one stage first home buyers represented 25 per cent of all loan commitments in the ACT, a level not seen since 2009, according to the Australian Bureau of Statistics.
Well-informed first home owners are active in the market. So how do you join them?
To get all the facts, come along to our First Home Buyers Information Session on Thursday, November 1, from 6 pm – 7 pm, at 91 Northbourne Avenue, Turner.
All the myths about financing your first home will be addressed with facts.
For starts, you do not need a 20 per cent deposit to get into the market. There are a range of options available.
Elevated Financial Group principal Ali Hammoud will be speaking at the information night on all the financial issues, including what deposit you will need, lending options and case studies of people in Canberra entering the property market for the first time.
Solicitor Judy Morris, principal of Judy Morris and Associates, will go through the legal requirements of buying your first home as well.
I’m looking forward to speaking to potential first home buyers too. I will be giving you case studies of my own. Our team has been helping first home buyers into the market including a couple of public servants who have bought a single-bedroom unit off the plan close to the Woden Town Centre with a $17,500 deposit, representing 5 per cent of the $350,000 purchase price.
They will settle on this apartment in about 12 months time. They have spoken to financial institutions to ensure they can proceed and now have plenty of time to organise their financial arrangements.
Given the correct information you will have the opportunity to get a foot into the home-owners market and in some cases, pay less in mortgage repayments than what you are each week for rent. Across the Tuggeranong Valley, first home buyers are purchasing established three-bedroom, one-bathroom homes in a market active over the past six to 12 months. They can afford a bit of land and are able to start a family.
The aim of our information night is to demonstrate with facts that it is possible to get into the market.
There will be no hiding from how hard it can be to save these days, most especially with tight demand for rental properties and consequently, the steep asking rents.
But rather than living closer to the city, many young people are moving out to a more affordable suburb, enabling them to put aside a little more for their first home.
As a first home buyer attending auctions these days, you will face far less competition from investors compared to previous years. In this regard, the Royal Commission and tighter lending to foreign investors are working in your favour. Because the tougher lending conditions have hosed down hot demand that has for many years sidelined young, new entrants into the market.
Not only is there less competition, but a broader offering of suitable properties for first timers.
Taking on a mortgage is the biggest commitment you are likely to make financially. So find out for yourself about the Canberra property market’s track record, and why it is still outstanding, because of high incomes in the national capital and population growth. Ask you parents if, when they set out as you are about to do, they knew what they know now about the market. Do they wish they bought five homes in their street instead of one? They will say, ‘Yes, of course, we would’.
This is about getting into the market and staying in it for a long time, because history shows you will do well. Ultimately, that is what home ownership is about.
Will Honey is principal of the Independent Property Group, Tuggeranong.