Stop Renting and Buy Now

If you want to stop renting and buy a home now, there are a number of options that may assist you, including low deposit loans, family equity, and budgeting and savings solutions.

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Low Deposit Home Loans

Low deposit home loans, where a buyer needs a deposit of only 5-10 per cent (plus costs), may be available depending on your circumstances. Some lenders may even waive the requirement to show genuine savings, instead allowing you to use a combination of savings, gifts, inheritances and first home buyer grants. Low deposit home loans may not available from all lenders, or for all situations.

Family Equity Loans

Family equity can be a good way to stop renting and buy now, if you have a good income but lack the deposit required by most lenders. With family equity, a family member usually your parents assists you with the purchase of your home either by providing security using the equity in their home to cover the deposit amount, or by guaranteeing a portion of your ongoing home loan repayments.

Put a Budget in Place

Putting a budget in place can assist you to bring forward your purchase plans and stop renting sooner. A good mortgage broker or financial planner can assist you to tailor a budget to your needs that enables you to save without taking away all of life’s little pleasures. Alternatively, you can try our budget calculator to help get you started on your savings plan.

Rent to Buy

Rent to buy is cited as an alternative method of beginning the property purchasing process to sourcing a traditional home loan from a bank or lender. Rent to buy agreements typically combine a standard rental/lease agreement with an additional option to purchase the property after a specific timeframe. Rent to buy is not the same as purchasing using a lease purchase or through vendor financing.

Be Wary of Rent to Buy Schemes

There are a number of things to be wary of if you are considering a rent to buy scheme, including:

  • it is difficult to gauge whether a vendor is genuine, and there are few, if any, safeguards for buyers
  • you will almost certainly pay significantly above market rates for the property
  • the interest terms will be 1-2 per cent higher than a standard home loan
  • you do NOT own the property until the full purchase price is paid
  • as a first home buyer, you are not eligible for any grants and concessions until the full purchase price is paid and the title of the property is transferred to you
  • even after the option period is over, you may not qualify for a home loan and stand to lose not only the property, but all the option fees you have paid
  • you have limited legal rights if something goes wrong

The safest path you can take is to work with your mortgage broker on ways to get you into a position to make use of a home loan sourced through a reputable and secure bank or lender. Your mortgage broker can help you to determine your options and develop a plan to qualify for the finance you need.

If you do decide to use a rent to buy agreement, it is essential that you consult your solicitor for assistance and advice, particularly when reviewing the contracts.

Your state office of fair trading may also have some useful information on rent to buy, including any notifications of false or misleading schemes, contact your state department of fair trading.