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Developers Trying To Entice Young Australians Into Buying Their First Homes

Post by Sharat on June 28, 2018 · Under News · Comments Off on Developers Trying To Entice Young Australians Into Buying Their First Homes 

The hardest thing about climbing the property ownership ladder for a young Australian is saving up for the down payment on their mortgage. One property developer in Western Australia has developed a plan that seeks to make that a problem of the past. The plan launched by Apartments WA is called Preposit and allows young Aussie home buyers to move into their apartment even before they have finished saving for their deposit.

Win-Win

A company spokesperson says the scheme is very simple, you get the keys to your apartment and you are allowed to move in immediately, then you can continue to save your monthly rental which the company holds for you and returns to you as soon as you have saved enough for a deposit. Essentially the company is renting the property to you whilst you are saving for your deposit. If you cut and run the company holds on to the property and if you complete the transaction, the developer has made a sale, so it is really a win-win situation.

Do your homework first

Don’t get too excited experts warn, because these kinds of schemes are a signal that the property market is over-supplied. Developers who need to get rid of inventory will construct these types of schemes so it is important that you do your homework before agreeing to such a deal. Make sure you know exactly what is being offered and read the fine print so you know what potential pitfalls exist. For example, what is the time frame for saving up the deposit.

Low deposit mortgages may be a better alternative

The main issue with this type of scheme is it leaves the homeowner with the task of making their mortgage repayments and trying to save for a deposit simultaneously. This is likely to stretch the budget. If you find it hard to save after paying rent, then you will also struggle if you are making a mortgage payment as well. It is great to pay of a home loan instead of paying rent because it means you get closer to owning your home outright. If you wish to do that as quickly as possible, then this sort of scheme is worth looking at. An alternative way to start on the property ladder is opting for a low deposit home loan instead, where you can borrow up to 95% of the price of the property.

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