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I am keen to buy my first prope...

I am keen to buy my first property in Australia, but I have heard that I need 20% deposit, it could take a while for me to do this, is there any other alternative?

It is not always easy to save up your deposit with all the many spending options available to you as an expatriateThe good news for you is that recently some banks in Australia have begun allowing

It is not always easy to save up your deposit with all the many spending options available to you as an expatriate

The good news for you is that recently some banks in Australia have begun allowing Australian Expats and Overseas based Australian Citizens to borrow up to 90% of the purchase price of their Australian property.  You can call our office or visit our website to get more information on the banks that offer this facility.

This will certainly help if you are keen to enter the market sooner than later and take advantage of favourable conditions, particularly on the East Coast of Australia.

However, you get nothing for nothing.  The reason you can put in less than the usual deposit of 20% is that you are required to take out Loan Mortgage Insurance (LMI) and this will add to the cost of your loan.

That aside, if you really want the property and are willing to bear the cost, then this type of loan will help accelerate your purchase.

If you do decide to borrow the extra amount, then remember to fully assess the additional holding cost and try to reduce the loan to a reasonable level as soon as practical.

Another option you may have is to purchase a property before completion, this is called “Off the Plan” where you pay an initial deposit of 10% in most cases, and no more until the property is fully completed.

In some cases this can be one to three years and it then gives you time to save the remaining 10% required whilst knowing exactly what the purchase price is.

This can be a positive move if you believe the prices will rise in the future as you lock in a price, however make sure you have confidence in the price as if the market softens you can get caught out.  Bottom line is make sure you do your homework.

As a simple rule, it is usually best to buy off the plan when the market is in a “soft” cycle, and most risky when the market is very strong.  Purely because things are always likely to improve when bad, and bubbles burst when blown up too far.

Whether you decide to borrow the extra or buy of the plan, make sure you get the best property you can to give yourself the highest chance of financial success.

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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