Did you know a strong history of meeting your rental payments may in fact help you get across the property finishing line?
It’s no secret the cost of renting is one of the biggest barriers to home ownership. According to research conducted by RAMS, nine out of 10 prospective home buyers are paying some form of rent whilst trying to save towards their first purchase.
Furthermore, the cost of renting in Australia is not cheap, so it leaves many aspiring buyers with little left to save once the rent is taken care of.
But the news is not all bleak. Lenders are starting to recognise that keeping on top of your rent demonstrates some pretty good money skills. In fact, rental payments are now being accepted as evidence of genuine savings.
Just recently St George said it would accept rent as a form of saving for a home deposit if there is evidence of a minimum of 12 months continuous satisfactory rental history and the property is leased through a property manager.
RAMS also recognises rental payments through its Rent Saver Home Loan which it launched in September.
In addition to rental payments being accepted as savings, lenders have recently been working to ease their lending policies and offer more first home buyer friendly options – which all but disappeared as a result of the financial crisis.
For example, Yellow Brick Road is one lender who has removed the requirement for genuine savings. It will accept a deposit which may have stemmed from a family gift, a lucky windfall, a tax return, an inheritance or a combination of such sources.
Higher LVR (loan to value ratio) lending has also re-opened up in the past six to 12 months, which means first time buyers can get into the market with as little as a five per cent deposit.
If you’re a budding property buyer, take heart, your borrowing options are not so bad.
If you’d like to make 2011 the year of your first purchase, get down and visit a mortgage broker tout de suite. Offering you a range of loans from a range of lenders, a broker will be able to advise you on exactly what options are open to you and just what financial goals and plans you will need to set in order to make your property purchase happen.