The cost of living has overtaken housing affordability as the primary obstacle to home ownership, according to Helia’s 2024 Home Buyer Sentiment Report. Based on a survey of 3,002 prospective buyers, the research highlighted that the financial hurdles faced by home buyers are shifting, with the “cost of living” now seen as the leading barrier (54%), surpassing “housing affordability” (43%).
One of the key insights from the report is the increasing difficulty first-time home buyers face when trying to save a traditional 20% deposit. The high cost of living, particularly in larger cities like Sydney, where it takes up to 14 years to save for a 20% deposit on a house, has left many aspiring homeowners feeling locked out of the market. This is especially true as inflation and rising interest rates continue to squeeze household budgets.
If you’re finding it hard to save for a large deposit, there are practical solutions that can help you get into the market sooner. As mortgage brokers, we specialize in identifying pathways to home ownership, even when the cost of living is weighing you down.
Consider Lenders Mortgage Insurance (LMI)
One of the most effective ways to speed up home ownership is to take advantage of LMI. Instead of waiting years to save for a 20% deposit, you could potentially buy a property with just 5% down, using LMI to bridge the gap. While there is an upfront cost, the long-term benefits of getting into the market earlier often outweigh the LMI fee, as home prices tend to rise faster than you can save.
As Greg McAweeney from Helia mentioned, the equity gained from purchasing a property early can outweigh the cost of LMI in the long run. By using LMI, you’re not only reducing the time spent saving but also increasing your chances of benefiting from property value appreciation.
Explore Family Support Options
A growing number of home buyers are receiving financial assistance from family, either in the form of help with deposits or ongoing costs like mortgages. While the “Bank of Mum and Dad” remains a popular option, there has been an increase in families contributing to ongoing expenses rather than the upfront deposit. We can guide you on structuring these contributions to ensure they don’t interfere with your mortgage application or financial stability.
Exploring First-Time Home Buyer Grants and Schemes
Many states offer grants and incentives for first-time home buyers, especially when purchasing new properties or land. As brokers, we stay updated on the latest schemes and can help you take full advantage of these programs to reduce your initial costs and enter the market sooner.
Building a Tailored Savings Plan
We know that navigating the cost of living while saving for a home can be overwhelming. That’s why a personalized savings strategy can make all the difference. By working with a broker, you’ll get a clearer picture of how much you need to save and where you can cut back on expenses. This might involve reviewing your spending habits and finding areas where you can reduce non-essential costs to meet your savings goals faster.
Choosing the Right Mortgage Option for You
There are flexible mortgage products that can help you get a loan with less than a 20% deposit. These might include guarantor loans, joint home loans, or other financing strategies that can accommodate your financial situation. As brokers, we can help you identify the best options based on your income, savings, and future goals.
Long-Term Benefits of Using a Broker
The Helia report shows that 91% of first-time buyers are now more likely to work with a mortgage broker. This reflects the growing complexity of the home buying process and the need for expert advice. Brokers not only save you time and effort but also offer tailored solutions that fit your financial circumstances.
By helping you understand your borrowing capacity and showing you alternative pathways to ownership, a mortgage broker can simplify the journey. Whether you’re navigating the rising cost of living or unsure about the right deposit amount, we’ll work with you to make home ownership a reality sooner than you might think.
The cost of living may have made the home ownership journey more challenging, but it doesn’t have to delay your dream of buying a home. With the right strategies—whether it’s using LMI, accessing family support, or exploring government grants—there are ways to overcome the barriers. Partnering with a mortgage broker can provide the expertise and support you need to enter the property market sooner, even in today’s tough economic climate.
If you need assistance or have questions about navigating today’s challenges in home buying, don’t hesitate to contact us! We’re here to help you find the best path to home ownership!