A 34 year old Customer Service Attendant at St George Leagues Club has recently moved into his own property in Punchbowl in Sydney.
He shares the positive experiences with the recent purchasing of his first home after nine long years of renting.
Carlos’ goal was to buy his own property and get out of the rent trap. He approached the banks and spoke to loan consultants for advice on the best way to finance a home loan. The answer was that he needed to save for a deposit.
His target savings period for an adequate deposit was two to three years. However, Carlos soon found out that saving money was really difficult. It seemed that every step forward he took, he also took a step back. Carlos’ rent was high and he just wasn't able to save as quickly as he had hoped.
To give himself the incentive to save, he decided to actually do some research into how much he would ultimately need to save up to buy his first home. Carlos read mortgage magazines and other publications. It kept him up to date with the latest news and products on the home loan market and, as a newcomer to the property market, he found the magazine's professional and unbiased advice very useful.
While Carlos was doing this, he discovered that 100 per-cent home loans were available on the market.
He didn't know that such home loans were available. Carlos decided to investigate further as he was under the impression that he would need to save 10 to 20 per cent of the purchase price before he would even be considered for a mortgage.
Carlos figured that taking out a 100 per cent loan would mean high interest rates but he was surprised to discover that even from a non-bank lender, this is not necessarily the case.
The company assessed Carlos’ savings capacity and recognised that he was persistent in saving and had a good track record, but that he wasn't saving quickly or aggressively enough to gather up a decent deposit for a traditional home loan because Carlos was spending so much of his income on rent.
The non-bank lender required Carlos to demonstrate that he had 3 per cent of the purchase price in savings and that the amount was saved over a period of at least six months. These savings were required to show good conduct as Carlos is a first time buyer and all assosiated cost with buying the property would be covered.
Carlos also needed to have a good credit history and to have been in the same employment for more than six months. Carlos met all of these criteria. Plus, since it was his first home, he was eligible for the $7,000 first home buyer's grant.
The exciting prospect of taking out a mortgage was slowly becoming a reality. It meant that he could transfer his fortnightly rental payments into fortnightly mortgage repayments and own his own home.
Once Carlos’ application had been approved, he started house hunting and found the perfect home, a two-bedroom unit in Punchbowl. Carlos was able to make an offer on the property for $165,000 with a deposit bond worth 10 per cent of the purchase price. Carlos bought the deposit bond from Deposit Power for a fraction of the cost of the 10 per cent deposit, which would have been $16,500.
Carlos bought the house and has since moved in. Carlos has been able to get a foot in the property market much earlier than expected. He’s now free of the dreaded 'rent-trap' and has stopped spending dead money on rent.
Plus, Carlos is now accumulating equity on which he can leverage later.