When buying property, most banks or lenders require a sizeable deposit plus costs before you purchase and settle. For someone starting off with little savings, you can still purchase property from understanding these three strategies. These strategies are guarantor financing, vendor finance and rent to own.
A guarantor loan allows you to purchase a home using someone else’s property as security, which alleviates the need of needing a big deposit. Utilising your parent’s property can help you secure a property for yourself. You can enter the property market and start making growth in property equity, which overtime will make you closer to owning your home.
Vendor Finance is when a buyer and seller create a loan together. To break it down, instead of a buyer getting a bank loan and giving the seller that amount of money. The buyer gives the seller a deposit and has the seller loan the rest to them. Similarly, to bank repayments, the buyer will then make repayments to the seller, as per their agreement.
Typically, buyers get into vendor finance agreements when they are not eligible to apply for a mortgage. After 5 to 10 years, the buyer should have improved their financial situation to be able to apply for a mortgage and pay a balloon payment to the seller.
Rent to Own
Rent to Own is an agreement that gives the tenant the right to buy the property at the end of the rental period, at the price that is agreed upon prior to signing the agreement.
These strategies are great options you can use to purchase a property if you have little savings or aren’t eligible for a home loan. Each strategy allows you to get into the property market in the short-term. If you are looking for advice on purchasing a property, the team here at Silvertail are happy to work with you and help you find the best strategy.
Call us today for an obligation-free chat on 1300 846 956 to find out more or Get Started Now.
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