For those considering sliding their foot onto the first step of the property ladder, headlines involving the astronomical rise in house prices can be confronting. Many young people with average incomes can wind up resigning themselves to a life on the rental merry-go-round, constantly paying dead money out to cover somebody else’s mortgage.
It is true that if you are a first home buyer, the rarefied air of the Darling Point or Bellevue Hill may be off the agenda for the time being. However, with some lateral thinking, there are methods which can start you on the road to homeownership sooner than you think.
Understand your borrowing power
Before giving any thought to homeownership, the first step should be to book an appointment with a reputable lender or broker. Putting a number figure to your borrowing capacity will bring clarity to where and what type of home you can consider purchasing.
To save time, take along as much documentation as you can muster, including at least:
- 100 points of identification
- Last two consecutive years of tax returns
- Last two consecutive years payslips
- Other income with substantive evidence
- Documentation surrounding other loans, debts and commitments
- Bank and credit card statements
Assess your monthly expenses and lower credit card limits prior to attending your appointment. Further tips as to what lenders may require can be accessed here.
Carving out a niche
Once your borrowing power has been assessed, you can then make solid plans based on those figures. If your purchasing ability is limited, thinking outside the box may be necessary.
Due to rising land prices around Sydney, many homeowners have found themselves property rich but cash poor. To this end, there is a strong push for larger inner-city blocks to be carved up and the selling of backyards is becoming big business for developers.
Consider taking matters into your own hands and doing a letterbox drop in areas which appeal to you. Accessing council maps of local neighbourhoods can pinpoint blocks which have the potential for a second dwelling. Canvass family and friends, as many may be considering tapping into the equity of their land.
Corner blocks with the current residence sitting well to the front are ideal for this type of subdivision as they provide the ability for each residence to have its own street frontage. Many property owners are delighted to turn their unused backyards into cash windfalls.
Knock Down and Rebuild
Another pathway to an affordable yet luxurious new home is through a knockdown/rebuild option. Purchasing a substandard home in an area you want to live and building a stunning new home on the block, can be an affordable way to attain the perfect blend of home and location.
Many builders have an expansive selection of desirable homes which can be adapted to suit all blocks and council requirements.
Setting your sights further afield can offer a pleasantly surprising amount of value. As remote offices and working from home becomes a more established option for employers and employees, the ingrained ‘city-centric’ thinking is losing its lustre.
Most builders have opulent Display Centres to showcase their house and land packages, in a range of strategic locations which offer convenience to transport, solid infrastructure and affordability.