Home Loan Assistance
Purchasing a home is a dream of many people across the country. If you are a low-income earner, you may think that this is one dream that is virtually impossible to attain, but nothing could be further from the truth. Between governmental support programs, and a variety of home loan options, low-income earners can make their home ownership dream come true.
It will take a commitment to take control of your finances and some careful planning, but it can be accomplished. The pathway to home ownership while on a low income may be a bit different to the traditional process of going to a bank and applying for a home loan, but it is still possible.
Below is a look at several things low-income earners can do to make home ownership become a reality.
Get Credit Report in Order
When you apply for a mortgage to purchase a new home, one of the first things the lender will check is your credit report. It is important that your credit report shows that you make your payments on time and that you do not have a lot of outstanding debt. To get a clear picture of what your credit report looks like, you should request a copy of your current credit report. Look over your report for any error and contact the credit reporting agency to fix those errors as soon as possible.
If you have any outstanding debts listed on your credit report, it is important that you contact the lender or company you owe money to and set up a payment agreement. If you are in the habit of paying your bills late, you may want to sign up for direct bill pay that will automatically on time, every time. Now, is the time to start repairing your credit report, so it will look good when you apply for a home mortgage. Depending on your current score, it could take several years to repair, so start early.
Australian First Home Owner Grant (FHOG)
The First Home Owner Grant program began in 2000, and is offered throughout the country. However, each state and territory has its own program, types of grants available, and eligibility requirements. This grants are paid in a one-lump sum and do not typically need to be repaid. You can expect to receive a grant from anywhere from $5,000 to $25,000 depending on your specific circumstances, where you live, and where you are moving to. The program includes standard grants, relocation grants, and various concessions, such as stamp duty exemptions.
Shared Home Ownership
If you are a low-income earner, one solution to home ownership may be through the Shared Home Ownership program. With this program, the government will actually purchase part of the home with you. The government may invest up to 30 percent of the total cost of the home. This will lower your financial obligation and make it easier for you to qualify for a loan. At some point in the future, you will have the ability to buy the remaining portion from the government, so you can own the house in full. If you decide to sell the house in the future, the government would reclaim their share of the sale.
These methods may be able to help you realise your dream of owning a home. The first step is to start saving as much money as possible to use towards a down payment, and to improve your credit report. When you are ready to purchase a home, check around at several banks, credit unions, and home lending agencies to see who will provide the best solutions for you. If you are initially denied for a home loan, it is a good idea to seek advice from a financial counsellor to fix your credit score to the point where you will be eligible for a home mortgage.