How to buy your first property as a single female in Sydney?
Sydney is a difficult city to buy your first home if you are a couple without kids, let alone, if you are a single female. As International Women’s Day approaches, I thought it is worth exploring some options that you have.
Firstly, do not think it is impossible. You may earn less money than your male counterparts, you may feel like real estate agents and bank’s don’t take you as seriously as they may a male in your position, but this is all easy to overcome (ok, maybe not always easy, but it is possible!).
Get your finances in order. Now. This means having a savings plan, tracking to a budget, considering and adjusting your spending habits and then talking to the bank about pre-approval. As a single applicant, a bank will always consider you a slightly higher risk because if you have to stop working for any reason, there is no back up to pay your loan. For this reason, it’s important to ensure you can demonstrate a consistent savings pattern over time, a solid savings base and a rainy day bucket (that will still be there once you purchase). Once you have pre-approval, real estate agent’s will know you are serious.
More finance - Banks will also consider how much of your weekly income goes towards your mortgage payment and ensuring you have enough left over to live. This again can disadvantage you as a single as you have no one to share internet, electricity, water costs with and the bank will consider all of this as 100% payable by you. Get yourself onto the best deals around town for mobile phone, internet, utilities etc so these expenses are reduced as much as possible.
You don’t need a 20% deposit. This is the biggest hurdle single females face in purchasing a property. Multiple options to consider here:
The First Home Loan Deposit Scheme: You need to apply for a place and be accepted, and then a 5% deposit plus stamp duty will get you on the property ladder (https://www.nhfic.gov.au/what-we-do/support-to-buy-a-home/first-home-loan-deposit-scheme/)
First Home Buyer Assistance Scheme: In NSW, buying a property valued at up to $650,000 and pay no stamp duty, and if the property is under $800,000 you will get a reduction in stamp duty (https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/assistance-scheme ). In Sydney, this doesn’t always go far, but it should help if you are willing to consider an apartment as a starting place.
LMI: You can generally purchase with a 5% deposit + stamp duty and have Lender’s Mortgage Insurance (LMI) added to your loan balance. Best news is this is not limited to first home buyers and applies to everyone. The cost of LMI can be significant but it pays to see what offers Banks have, St George is currently offering LMI for just $1 (https://www.stgeorge.com.au/personal/home-loans/first-home-buyer)
Guarantor: Do you have a family member (mum, dad, sibling) who has been on the property ladder for years and may have built up some equity in there home? If so, you can approach them about going guarantor on your loan. This does not require them to actually hand over any money, however, in the event you cannot repay your loan, the bank will look to recover the funds from the property they have offered as guarantor.
Consider Rentvesting - you may love living in your share house in Surry Hills, but the ability to afford an apartment in Surry Hills and maintain your lifestyle is out of reach. Rentvesting is where you continue to rent in Surry Hills, but use your savings to purchase an investment property in a more affordable area.
If you have found ‘the one’ and would like to engage Purchase with Penny to bid at auction on your behalf, find out more about our Auction Bidding services.
