Overcoming the challenges experienced by first home buyers

by Greg on August 26, 2015

first home buyers

Buying your first home should be an incredible experience. It should be synonymous with opening a new chapter in your life that will unveil the journey you are about to take. The dream feels so near, but can feel slightly out of our grasp due to the challenges that face first time home buyers nowadays. In Australia, it is reported that many of the new workers in the emerging workforce of generation Y are giving up on their dream of homeownership due to their economic challenges of being priced out of the market. While it is a real challenge that is forcing many of the new working class into a rental lifestyle, there is still hope for this generation to secure their first home and still become a proud first home owner.

The concern with being priced out of the market

This has been a serious concern for a number of years. The housing market economy is fueled by supply and demand. Prices have spiraled out of control as people engaged in bidding wars and continual buying and selling activity to improve the perceived sale price of a property. The pricing elasticity has reached such high levels that the thought of buying houses for cash seems like it was a myth, let alone being able to get an approved loan for your desired property.

It may seem dire, but not all hope should be lost.

There are different financing strategies that can allow you to fulfill your dreams of becoming a first homeowner. Below are a few strategies which you can pursue.

Leverage equity in an existing home as security

As a first home buyer, you won’t have access to this. However, you may be fortunate to leverage the existing equity from your family or friends homes. How it works is if your home was bought for $100,000 and the lender values your home now at $200,000, you would have accrued an extra $100,000 in equity in the property. This equity can be used to finance the bank for a deposit or you can arrange with your lender to use it as a line of credit (similar to a credit card).

Split the risk by raising the deposit from family and friends and dividing ownership.

The property won’t be completely yours, but you will be able to get your foot onto the property ladder. And as the saying goes, doing something is better than doing nothing. Seek out family and friends who have a few extra dollars lying around that they could put to good use. Over the long term, the money that is made from their investment can be returned to them with an additional profit bonus, making it a winning situation for everybody.

Seek out grants or bursaries offered by property developers or government organizations.

Most property developers are keen to sell their properties as quickly as possible. Some may even offer great deals where they will finance the deposit for you in the form of a grant or bursary. Additionally, you may even be entitled to assistance from your local government. Do some research to find out any current offers on the market and look out for any information where you may be entitled to grants or bursaries.

Find out from your lender if you can use any of your other assets as a security deposit.

You may have other assets such as vehicles or shares that may be taken into consideration. If this is the case, it will reduce your dependency on your cash security requirements. Speak to your lender to find out more.

First home buyers have it tougher than people did ten years ago. It is best to avoid the heartache that so many people in Australia are going through and to find a creative way to gain an opportunity to purchase your first home. These alternative financing strategies should help you overcome the financial challenges that most first time homebuyers face today.

{ 2 comments… read them below or add one }

mavinrealestate September 16, 2015 at 5:17 pm

I love this article. This is very well written. You have truly enriched me with some excellent knowledge.


aiden September 22, 2015 at 8:49 pm

The lodging business sector economy is energized by supply and interest. Costs have spiraled wild as individuals occupied with offering wars and ceaseless purchasing and offering action to enhance the apparent deal cost of a property.


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