Buying a house is a big investment, and it can be challenging on a low income. However, with planning and research, it is possible to achieve the dream of homeownership in Australia.
If you are in the market for a new home but you are on a low income, this blog can help you. This blog will provide information on how to buy a house on low income in Australia. We will discuss how to save for a deposit, the different government grants available, and the additional help provided to you by banks and mortgage brokers.
How to save for a deposit
Saving a 5% deposit is the first critical step in purchasing a house. A deposit of 5% is the minimum required for most home loans in Australia for first home buyers. Saving money can be challenging, especially if you have a lower income, but there are ways to make it easier.
Step 1: Create a budget and stick to it, this is a very important first step. Cut out all unnecessary expenses and redirect the money saved towards a house deposit.
Step 2: Delete some apps from your phone – namely gambling apps, banks do not look favourably on this expenditure.
Step 3: Review your subscriptions – do you need all those subscriptions or could you make a sacrifice whilst you save up for your first home?
Step 4: Look for ways to increase income. This could be through taking on a second job, selling unwanted items, or negotiating a pay rise at work. If you have a second job, estimate your tax by using One Click Life’s Second Job Tax Return Calculator.
Government grants for first home buyers
The Australian government provides several first home buyer assistance programs that can help people with low incomes purchase a house. The First Home Loan Deposit Scheme (FHLDS) allows first home buyers to purchase a house with a deposit as low as 5%.
Another program, the First Home Owner Grant (FHOG), provides a one-time payment to help with the cost of buying or building a new home. Eligibility criteria apply, so it’s essential to research and understand these programs thoroughly.
Example of government grants
For example, suppose someone earning $66,000 a year wanted to purchase a house for $400,000. In that case, they could potentially borrow up to $380,000 with a 5% deposit of $20,000 using the FHLDS. The repayments on this loan would be around $2,040 per month over a 30-year loan term starting with an interest rate of approximately 5%. It’s important to remember that these figures are estimates, and the actual amount borrowed, and repayments will depend on several factors, including interest rates and lender requirements.
Additional help for first home buyers
Several banks offer first home owner assistance packages that provide additional benefits, such as reduced interest rates, fee waivers, and cashback offers. It’s worth researching and comparing these packages to find the best deal for individual circumstances.
A mortgage broker can be your best friend in buying your first home. Having an experienced hand guiding you through a big purchase like your first home is important. Best thing about a mortgage broker is that the bank pays them, so there’s no out of pocket expenses for you!
Conclusion – how to buy a house on low income in Australia
Purchasing a house with a low income in Australia is possible, but it requires careful planning. Saving a 5% deposit is the first critical step, and there are ways to make this easier, such as creating a budget, managing expenditure and looking for ways to increase income.
The Australian government provides several first home buyer assistance programs, and many banks offer first home buyer assistance packages. It’s essential to research these thoroughly to find the best option for individual circumstances or simply talk to a mortgage broker.
One Click Life Mortgage Brokers
One Click Life is a mortgage broker that can help you find a lender that meets your needs! We partner with a number of lenders to ensure you are receiving the best deals on the market for your first home. We also guide you through the maze of government first home buyer grants.
We do more than just mortgages! One Click Life can also take care of your Tax Return, Will, Personal Loans, and Private Health Insurance so you can focus on the things that matter to you. We make your financial life simple.