Five ways to get a leg up on the property ladder (including one new one)

Here, the government just goes guarantor for 15 per cent to take borrowers up to the 20 per cent that exempts you from extortionate lenders’ mortgage insurance (LMI). The owner is then responsible for payments on 95 per cent.

Leg up 2: Whether you need a 2 per cent deposit for Help to Buy, a 5 per cent with the Home Guarantee Scheme, or are targeting the 20 per cent that exempts you from LMI, there’s deposit help too.

The First Home Super Saver scheme allows first homebuyers to build this with extra contributions into their super fund, which are taxed at just 15 per cent. It’s limited to savings of $15,000 a financial year or a total of $50,000 across multiple years. This still means two co-owners could amass $100,000.

When you’re ready to buy, you just submit a request to release your savings plus assumed associated earnings (currently 7.38 per cent).

Don’t forget every state gives first homebuyers different concessions on stamp duty and sometimes grants that take away some of the purchase pain and can sometimes count as part of your deposit.

Leg up 3: For those who have no hope of building a 20 per cent deposit to avoid lenders’ mortgage insurance, and can’t access the government schemes, finding a private guarantor can do a similar thing.

Family with property can tap into some of that equity to top you up to a 20 per cent deposit. But a big caveat on this one: it puts their property at risk if you default; the liability for the loan is shared proportionally who puts up what.

The guarantor can look to reduce their equity stake when the main borrower can afford it.

Leg up 4: With the national median house price rising 47 per cent in the past five years, Digital Finance Analytics says the bank of mum and dad is now Australia’s ninth larger lender.

Parents are increasingly cashing out some super, downsizing or taking on reverse mortgages to get their children over the loan line. But if that still doesn’t get you close to homeownership, there’s one more thing to try.

Leg up 5: The great Australian property dream is not dead if it looks different.

There is renewed criticism of negative gearing tax concessions, as it encourages people to buy investment properties and potentially bids up prices for first homebuyers. So, why don’t you beat them at their own game and become an investor?

You could “buy to let” rather than “buy to live” … snaring all the tax concessions while continuing to pay rent yourself.

Because with your rental income factored into the lender’s calculation of what you can afford to borrow, it may push you to a realistic amount without needing a shared equity scheme. And this way, via generous tax perks, the government still helps you.

Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.

Advice given is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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