10 Sep How to invest in property without savings
It can be incredibly frustrating to think that you’ll be paying for somebody else’s mortgage the rest of your life, unable to purchase a home. The reality is that sometimes income isn’t the issue. Imagine this, you live and work in the city but you can’t buy a house, other than on the outskirts of Melbourne or some other city, but then you’re faced with the issue of increased transportation costs. That can be incredibly deflating, so how do you get together a deposit or invest in property when you lack a deposit.
To start with, you need to know that it will be really difficult to buy a home without a deposit, however there are some steps you can take that will help you achieve your property dream.
If you’re already a home owner then it should be fairly easy for you. You will be able to use the equity you have in your existing property to take out a second mortgage. Of course, this does depend on how much equity you have in your property. It won’t be accessible to everyone and it won’t be possible for ALL home buyers. Only some can do this.
The other way if you’re young, and have a high income is to get a guarantor. In Australia it’s becoming more and more common for people’s parents to put up the deposit, although this isn’t accessible to everyone, but it is an option. You could also get your parents to buy the property for you against their mortgage and then instead of paying the bank, you pay your parents. I’ve heard of one person doing this.
It’s more uncommon. You could see if the owner could finance your purchase. Just like direct sales without an agent, this is incredibly uncommon. The owner/seller would lend to you directly. Without the bank’s involvement this can be complicated, although that said, a loan is a loan no matter where it comes from.
Many people are starting to buy with their friends. You need to have a lot of faith in your friends to go into property ownership with them, and it would be worthwhile signing some type of legal document to ensure you know where you all stand before you get into the biggest financial transaction of your life.
These are just a few ways you can buy your first home without much in the way of savings. Remember though, the earlier you start, the faster you’ll be able to get into property and build up your portfolio.