One of the biggest challenges for first-time buyers is saving up for a deposit. The First Home Savers Account (FHSA) alleviated this burden by providing tax breaks and monetary subsidy to first-homebuyers saving up for a deposit. And according to ME Bank, people who were able to benefit from the FHSA scheme were positive about the program.
But now that the 2014 Federal Budget has been announced, it’s been confirmed that the FHS) is being phased out. And with the decision, first homebuyers are left with even less financial assistance to purchase property.
No doubt, there will be many aspiring homeowners who will be disappointed with the announcement. And perhaps, some may feel that they are already being locked out of the property market forever.
However, there are ways around the problem of financing. Keep in mind that the high cost-of-living makes it difficult for people to save cash. And in the traditional process of transacting real estate, sellers usually ask for all the cash now. What buyers can do in order to make it easier for them to purchase the house is to negotiate for flexibility in the payment terms.
In traditional bank financing, the buyer has to cough up 10%-20% deposit right now. But a buyer and seller can always agree on a more convenient arrangement. For instance, a buyer can agree to assume the existing loan to the house rather than take out a new bank loan. In addition, the buyer can negotiate to pay the remaining equity in increments. In that way, the buyer won’t be burdened by coming up with all of the money now. It makes the process of buying that much easier. In exchange for flexibility, a buyer will agree to the price of the seller.
This type of arrangement is very much like buying an appliance in instalment. A store will give you a discount if you pay straight up cash. But the buyer will be paying the full amount if the buyer opts for the monthly payments.
Logically, you’d assume people will opt for the discount. But most people opt to pay the full price because it is the more convenient option. And really, this is what first-homebuyers need – a more convenient option to buy property.
If a house is easy to buy, people will be able buy it. And through flexible seller finance terms, real estate transactions can be made conveniently.
To learn more of Seller Finance, be sure to join my upcoming live property training event: Ready, Set, BOOM National Tour. Visit readysetboom.com.au today to reserve your free seat.