PRODUCT OPTIONS THAT CAN FAST-TRACK HOME OWNERSHIP

In a survey of 2,000 Australian adults, the 2008 Genworth Financial Mortgage Trends Report revealed that 16 per cent of Australians do not expect to ever buy a residential property – a sharp rise compared with six per cent last year and four per cent in 2006.

But don’t be disheartened. While breaking into the property market can be a challenge for many, mortgage innovation over recent years has actually put homeownership within people’s reach.

There are a number of strategies and products that can make the dream of home ownership a reality.

Mortgage lending has evolved beyond recognition over the last couple of decades despite the challenge of affordability. The range of product alternatives now available is much improved compared to previous generations of home seekers.

One way to reduce monthly mortgage repayments is taking advantage of an extended loan term. The standard loan term for a mortgage in Australia is usually 25 or 30 years; however, more recently 35 and 40 year loan terms have become available.

Longer loan terms reduce monthly repayments by stretching them out over a longer period – a simple option to make servicing a home loan more affordable.  The Mortgage Trends Report highlighted the increasing popularity of such loans, with over 51% of respondents stating they would consider a mortgage with an extended loan term, and increase from 39% in 2007.

Choosing a longer term may mean getting into your home sooner, and you can always make additional repayments to reduce your total interest bill, or refinance down the track when you are able to regularly make higher repayments.

Another option for borrowers struggling to save a deposit is tapping into the equity available in their parents properties. Families are often willing to help out those wishing to enter the property market, but don’t have the cash readily available to generate a deposit. Using a limited guarantee over their existing property, parents of family members can assist to reduce the overall loan amount, enabling their son or daughter to realise their home ownership dreams sooner.

With careful budgeting and by capitalising on some of the product options that are now available, the chance of buying your own home could be closer than you think.