There is a new bank in town and no, its CEO will not be facing the Royal Commission and possibly collapsing… Our banks and financial institutions have been subject to some grilling by the Royal Commission into their practices and some of the evidence found is shocking. However, there is a new bank in town and they are tackling the growing problem of our younger generation entering into the property market.

This new bank is already close to us and is willing to step in to help us take our first step into the property market. That bank is called the Mum and Dad Bank. Majority of my recent clients are looking to get into the property market with the help of their parents. Until speaking to us, many of our clients thought they had no chance of buying their home. We have shown all our clients 3 different options to get into the property market. Some clients need to save over the next few months to raise a deposit to buy a property, some clients can buy a property now with the help of their family and others can save their deposit through the governments first home buyer incentive First Home Super Saver Scheme. Some will use a combination of all 3 options.

In my 17 years that I have been in this industry, I haven’t seen a better time for First Home Buyers to enter the property market. There are many government incentives combined with the help of different loan options that will allow this.

Firstly let me explain the First Home Super Saver Scheme, which was introduced by the Federal Government in the 2017 -2018 Federal Budget. This scheme basically allows potential First Home Buyers to save for their first home by salary sacrificing their income into their super while only paying 15% tax, rather than their regular tax rate. Then the first home buyer can apply to release the contributions to help with the purchase of their first home. This is a great way to save for a first home while saving tax and also currently being guaranteed a 4.77% return on contributions.

Then, there’s the mum and dad bank. Typically most lenders will accept a guarantor to be immediate family; mums, dads, grandparents, sisters, brothers, aunties and uncles can all be guarantors for your loan. How this works is that the family member can offer their real estate property as security for 25% of the loan amount. The guarantor is protected and is only limited to 25% of the loan. In the event of a default the bank will first sell the first home buyers property to recover the outstanding loan, and only when there is a shortfall will the guarantor will be asked to pay back the outstanding loan amount.

This option is a great, as the most difficult part of buying your first home is saving for the deposit. If you walk into a bank, they may just give you the loan, however, we take further measures to ensure the guarantor is protected as well as the First Home Buyer. Measures such as written legal agreements between the first home buyer and the guarantor in the event of a disagreement, appropriate insurances and also something we call Mortgage Conditioning.

Mortgage Conditioning is a plan we put in place to determine if the first home buyer is comfortable making the regular repayments without the loan in place yet. We ask them to make regular deposits into a savings account as if they were paying their loan. This allows for the first home buyer to experience what its like to have regular financial commitments without taking out such a big loan.

The other option is for the First Home Buyer to enter the property market with as little as a 5% deposit. This is a great option for those who don’t have the support of family. This option can be a little more expensive than your traditional loans, but usually cheaper than the gains you miss out on if you don’t buy a property.

In addition to the above let me remind you of the government benefits still being offered by the federal government, they are the First Home Buyers assistance program which exempts Stamp Duty on new properties and also existing properties up to the value of $800,000 and also a one-off grant of $10,000 when you purchase a brand new property up to the value of $600,000 and if you build a property to the value of $750,000.

Do you know anybody that could take advantage the great offers available to First Home Buyers? I am happy to share more information on any of the government schemes or loan options available.

I’ve opened up my calendar for you to schedule a First Home Buyers Consultation below.

My parents are my backbone. Still are. They’re the only group that will support you if you score zero or you score 40. *Kobe Bryant*

Thank you for reading