Buying a home solo

Stepping into the property market for the first time is a significant milestone, and doing it solo? That’s a huge accomplishment.

The current housing climate feels daunting for many, but for those purchasing on a single income, the hurdles can seem even higher. A tighter budget, limited borrowing power, and the challenge of building up a deposit can all feel like major obstacles. But here's the upside: buying a home on your own is entirely achievable and increasingly common. This guide will walk you through the key things to know as you start your journey.

Money talk – the deposit

The infamous 20% deposit can feel like the biggest barrier to entering the property market – but the truth is, you don’t actually need that much to get started. Yes, a full 20% deposit helps you dodge Lender’s Mortgage Insurance (LMI), but in a rising market, it can be smarter to jump in earlier with a smaller deposit and pay the LMI.

In case you’re unfamiliar with it, LMI is a fee lenders pass on if your deposit is under 20%. It’s not insurance for you; it protects the lender in case you can’t keep up with your repayments.

But thanks to LMI, you might be able to buy with as little as 5% down. For example, on a $550,000 home, 5% is $27,500, and that’s a far cry from the $110,000 needed for a 20% deposit.

Note: LMI can be paid as a one-time upfront cost, or it can be rolled into your loan. Just keep in mind that it will then accrue interest like the rest of your mortgage.

Saving, saving, saving

Choosing a smaller deposit amount is a smart focused goal, but it still calls for commitment and intention. With your single income, every step you take matters and adds up.

While a lotto win would be nice, your true power will lie in your ability to take control of your spending. By reviewing your spending habits and making conscious choices about where your money goes, you’ll be prioritising your future.

With the right tools and a bit of strategy, building your deposit might not be as daunting as it seems. And the reward of your own home is well worth the effort.

• Get your spending under control
  Do you really need four streaming services or to get a haircut every four weeks?
  You may be interested in: mymo by P&N Bank to reign in your budget.
  
  
• Simplify saving
  You’ll be more likely to reach your goal (and sooner) if saving money is easy.
  You may be interested in: The P&N Bank Savvy Saver account (teamed up with Pay&Save) to get your spending helping your savings.

Know your limit

Purchasing a property on your own usually means you’ll have less income than two people buying together, and this means less borrowing power. Banks and lenders will also look at loan serviceability when considering a loan application.

Flying solo will likely mean you’re limited in terms of what you can buy, so you may need to search out cheaper suburbs, choose an apartment over a freestanding property, or consider the “worst house on the best street”. It’s likely that a compromise will need to be made somewhere – but bear in mind, that would probably be the case if you were coupled up too!  

Remember, a smaller loan can also mean more manageable monthly repayments, which is a big plus when you’re footing the bill solo.

Take advantage of assistance

Luckily for first-time buyers, there are government incentives and schemes available to help make purchasing a property more achievable. Whether it’s a stamp duty reduction (or exemption) or a grant, the assistance available differs from state to state.

Check out the support available in Western Australia.

Note: The First Home Super Saver Scheme is a federal government initiative that may be of interest.

Explore your options

‘Rentvesting’ is a growing trend among Australian solo first home buyers. This is when you buy an investment property in an affordable suburb and rent in the location you want to live in. It can be a smart way to crack the property market because it allows you to buy a property purely from an investment perspective and then use it to work your way up the housing ladder in the future.

It’s not for everyone, but another option is to have a guarantor on your loan. That means having your parents (or another family member) guarantee your home loan using their own property as security. If for any reason you can’t repay your mortgage, your guarantor is responsible for covering it. Learn more about guarantors.

Did you know?
You don’t have to be in a romantic couple to purchase a property with someone. You can co-buy with a sibling, close friend or even a parent.

Fly solo

Buying a home on your own is a bold step, but it's absolutely achievable with smart planning and the right support. You’ll invest in your future and build long-term security, and that sounds pretty sweet to us!