5 Tips to Help You Actually Buy a Home in 2022

Five Tips to help you actually buy a home in 2022

Inflation, uncertainty, and interest rate rises – it can make even the most ardent first home buyers turn into nervous nellies overnight. If you’ve been longing to get off the rent treadmill and get your foot on the property ladder instead, there’s no real “best” time to buy – timing the market may mean never getting your foot in the door at all.

We’ve put together five tips that will actually help you buy a home in 2022. 

Waiting for Rates to Rise

Prior to the RBA’s May decision to raise interest rates for the first time since November 2010 by a modest 25 basis points (the United States Federal Reserve rose by 50 basis points by comparison) to a still incredibly low 0.35%p.a., a rise in rates can, unfortunately, price some people out of the market – which makes it imperative to seize on any opportunity.

Savvy CEO and mortgage expert Bill Tsouvalas told News.com.au that “A 1 per cent rate rise on a $500,000 loan with a 2.7 per cent fixed variable rate would see repayments leap by an extra $3156 a year for the household.”

If wages only rose by the national average of 2.3%p.a, an average dual-income household would need to come up with an extra $35 per year to accommodate the mortgage.

For unlucky people that don’t see any wage rise, “they would need to come up with … $3156 extra on the mortgage per year.”

It’s easier said than done for many – which means some homes may be up for grabs where there were none previously.

Always use a Broker

Though rates are rising and will continue to rise, you can sometimes beat the banks by doing a little research. When you are looking for mortgages, always find expert home loan mortgage brokers. 

Mortgage brokers can sift through dozens of home loan packages instead of offering just one or two “cookie cutter” deals your bank might offer you. 

Brokers work hard to drive down interest rates and get the most competitive deal to make your dollar go further. Read more about how you can get the most out of your application with our blog on successfully applying for a mortgage.

Taking out Government Incentives

There are many government incentives to get you owning a home sooner rather than later. Most states and territories offer a First Home Buyer’s Grant to help with costs of stamp duty, legal fees, and the purchase price. 

The Federal Government also offers grants and incentives such as The First Home Loan Deposit Scheme. The scheme allows first home buyers to purchase a home with only a 5% deposit while avoiding costly Lenders’ Mortgage Insurance (LMI). The latest tranche of the scheme will close in June 2022, unless it’s extended or replaced by alternative government policies.

Moving Suburbs or Even Regions

There’s only so much beach and only so much land near cities – but who even needs to live in cities to get the best work/life balance anymore? Net migration to regional areas is the highest on record according to the Australian Bureau of Statistics – especially now that many white-collar jobs no longer require “bums on office seats” and can be almost – if not entirely – work from home jobs. Blue-collar workers can also make decent incomes by working in regions as infrastructure and housing requirements increase. 

It’s also noticeably cheaper. Median house prices for Australian combined regional areas is $600,219 – while medians for capital metro areas is $926,107. Going further afield could save you a lot of money – and have you in a home much sooner.

Consider Alternative Ownership Options

If you are worried that you won’t qualify for the First Home Deposit Scheme or government benefit, you could explore alternative ownership options. Joint tenancy is one option, where two or more people purchase a house and receive an equal share. That means dividing up mortgage repayments equally. Another idea is to purchase a home and then rent out one or more rooms to tenants who help pay the mortgage while you retain ownership.

Some renters buy a “fixer upper” or home in the regions to rent out, using the proceeds to fund a house they will eventually occupy later. 

Though this requires a lot of trust, you could also ask a family member with excellent credit to act as a guarantor. A guarantor is a “co-signer” to a mortgage and takes on responsibility for the mortgage if you are unable to keep up with repayments. It’s sort of like “piggybacking” on their good credit and equity if you have none. That said, if you lag behind with payments, they’re the ones holding the bag.

There are a few ways you can get into a house in 2022 – it takes a bit of compromise and creativity to get there!

This information is general in nature and not a substitute for professional financial advice.