5 ways to get on the property ladder sooner in South Australia

Looking to buy your first home in South Australia? Discover some of the ways you can get a foot on the property ladder more easily.

Buying your first home in South Australia can seem like a daunting task at first glance. In a time of rising interest rates, an increasing cost of living and stricter lending criteria, many people assume they're locked out of the market for the foreseeable future.

There is good news, though. If you're thinking about buying your first home, there are actually more options available than you may have realised.

One option is HomeStart.

For more than 30 years, HomeStart has been helping South Australians achieve their dream of owning a home. Backed by the South Australian Government, HomeStart understands that everyone's circumstances are different. Accordingly, HomeStart offers a range of low deposit loans and additional options catering to the needs of the South Aussie community.

1. Low deposit loans

One of the biggest barriers to getting a home loan tends to be saving a deposit. It's not unusual for financial institutions to require a deposit of at least 20% of the property's value.

This can be a staggering – and time-consuming – amount to save.

Fortunately, there are also low deposit loans available. These can enable you to purchase a home sooner.

Let's take a look at HomeStart's Graduate Loan as an example. It's available to eligible graduates who have a Certificate III or higher qualification.

It doesn't matter whether you're a recent graduate or graduated many years ago – you may still be eligible. The Graduate Loan allows you to borrow with as little as a 2% deposit for an established home or a 5% deposit if you're planning to build.

There are also low deposit loans with similar conditions for other professions, too. The Low Deposit Loan allows you to borrow with as little as a 3% deposit, as well as the requirement to cover the relevant upfront fees.

Now, there are some restrictions. It needs to be used for an established property, rather than an off-the-plan home or one you're building yourself. The property also needs to be located in a metropolitan area.

Neither the Graduate Loan or the Low Deposit Loan require lenders mortgage insurance (LMI) – which can ordinarily add significant costs to your overall mortgage. You'll also have access to a range of other loan features such as additional repayments and redraw.

One of HomeStart's distinct features is its Repayment Safeguard. Unlike traditional home loans, where repayments change with interest rate changes, HomeStart has the loan term itself fluctuate. It stretches with rate increases and contracts with decreases.

This means your repayments only adjust once a year, in line with inflation. This ensures predictability and stability in home loan repayments over the lifespan of the loan.

Learn more about low deposit loans with HomeStart

2. Shared equity schemes

If you find that you're not able to get a loan that covers the full price of your property, you might consider a shared equity scheme to supplement the loan.

This can be particularly useful for those who have lower incomes and may have difficulty securing larger loans.

Shared equity essentially functions as an additional loan to increase your borrowing power. However, it doesn't usually require direct repayments or interest. Rather, it entitles the lender to a share of the equity in the property.

In practical terms, the lender typically shares in any gain in property value when you sell your home.

The specifics vary from lender to lender, but we'll take a look at HomeStart to give you an idea of how they can work.

HomeStart's Shared Equity Option can be suitable for people whose dream home seems just out of reach.

It's taken out alongside a primary HomeStart loan and used to boost your home buying budget by up to 25% of the property price, up to a maximum value of $200,000. It's also interest and repayment-free.

You must already be eligible for a HomeStart Home Loan and the Shared Equity Option can't exceed the primary loan value.

It can be used for existing homes or building a new one. You can also pay back the Shared Equity Option over time.

Although it won't fit every set of circumstances, it can be a useful way to close the gap when you're looking at purchasing a home.

Learn more about shared equity with HomeStart

3. Starter loan

A Starter Loan is another type of supplementary loan available from HomeStart. If you're finding it tricky to save enough for a deposit and upfront costs for a home, HomeStart's Starter Loan could provide up to $10,000 to help you get into your own home sooner.

It's taken out in conjunction with a primary home loan from HomeStart. Generally, it's used to cover costs like stamp duty or other administrative expenses that come up when you're buying a house.

HomeStart's Starter Loan allows you to borrow up to $10,000 for a period of 7 years, with no interest or repayments required during this period.

Learn more about Starter Loans with HomeStart

4. South Australia First Home Owner Grant

If you're looking at building your first home, you may be eligible for a grant of up to $15,000 from the South Australian government.

These schemes are periodically updated, so it's best to visit the RevenueSA website for the most up-to-date information.

This grant can also be used in conjunction with other types of home loans, too – including some of those discussed in the other points in this article.

5. Look for a first home, not your dream home

One of the common pitfalls people fall into when they're looking for their first home is to look for their dream home instead.

But this isn't always the best approach. A first home doesn't have to be for life; instead, it can be about opting for a property that's going to meet your needs for the next few years.

This way, you're able to build up equity in your first home. This can then be leveraged to purchase a larger – or dream home – further down the track as your family grows and circumstances change.

Learn more about HomeStart loans today