Option 1: government scheme/s

The Australian federal government has set up a scheme encouraging people to get into the property market by putting down a relatively small 5% deposit. Australian banks typically want to see a 20% deposit, which could be in the hundreds of thousands of dollars and take years to save.

How it works:

• Provided your income is below certain thresholds

• You've never owned property in Australia

• You can purchase a home where the government pays the Lenders Mortgage Insurance (LMI)

State-level incentives:

In some states, there are additional incentives for first-time home buyers, such as waiving stamp duty. For example, in Queensland:

• If you purchase a property under $600,000

• You can come up with $30,000 as a deposit

• Prove this money has been in your bank account for three months

• Additional minor expenses (registration, fees) typically below $2,000

Reasons You Might Not Qualify:

• A partner used the grant in a previous relationship

• Your income is above the threshold

• The property price exceeds the maximum purchase price allowable by the grant

Option 2: The Secondary Loan Way

If you're not eligible for the government grant, you can still purchase a property with a 5% deposit. This involves getting around some of the strict lending laws when purchasing property.

What to expect:

• You'll have to pay for Lenders Mortgage Insurance (LMI)

• Stamp duty may be an additional cost

• Most lenders demand proof of 5% genuine savings

• Some lenders accept funds to complete from a personal loan

Loan structure:

At the end of the day, you'll have two loans:

1. A primary mortgage with relatively low interest rates for 30 years

2. A personal loan at a higher interest rate for seven years

Important things to think about

Proof of financial capacity

You must demonstrate financial stability through:

• Three months of bank statements showing savings OR

• Rental history where rent is equivalent to 5% of the property price

• Rental proof must be from a licensed agent (not private)

Servicing the loan

It's very important to remember that all of this is subject to servicing. You must have a strong income to prove you can repay:

• Your mortgage

• The personal loan

• Additional associated costs

Key advice

We take great care to ensure loans get approved. To verify your eligibility, we'll need to:

• Review your documents

• Verify the proposed lending structure

• Ensure you fully understand the impact of a home loan on your daily life

The 5% deposit scheme is amazing and should be used whenever possible.

However, if you're not eligible and have been turned down by multiple lenders, don't lose hope. A mortgage broker can:

• Get you amazing rates

• Help you enter the property market early

• Reduce your worry about missing out on homeownership

Remember: Your path to homeownership might be different, but it's still possible with the right guidance and preparation.